UK inflation is likely to rise in the coming months and may make life difficult for those on a lower income, said Bank of England governor Mark Carney in a speech on Friday.
Carney added that the Bank of England may tolerate an increase in inflation above the 2 percent target, in order to focus on supporting economic growth through low interest rates.
“Our judgment in the summer was that we could have seen another 400,000-500,000 people unemployed over the course of the next few years. So we’re willing to tolerate a bit of overshoot in inflation over the course of the next few years in order to avoid that situation, to cushion the blow”, Carney told those attending the public roundtable event in Nottingham.
He added that life may “get difficult” for the most vulnerable in the country as sterling continues to depreciate in the wake of the Brexit vote. Currently inflation stands at 0.6 percent, well below the 2 percent target set by the Bank of England, but may rise significantly in the coming months.
UK construction output falls in August
Investors were surprised by a 1.5 percent fall in construction output in August, with most forecasts suggesting a 0.2 percent rise.
However the Office for National Statistics’ Kate Davies said the fall wasn’t related to the EU vote:
“Construction output has fallen back quite sharply in recent months and contracted by 1.5% in August. As the fall this month is led by infrastructure, it seems unlikely that post-referendum uncertainties are having an impact.
“Monthly construction data can be quite erratic, though, so we would warn against trying to read too much into one set of figures.
“However the slightly better news was that the Office for National Statistics revised up the figure for July from zero to 0.5 percent growth.”