BoE: Inflation could fall to 3% by end of Q1

Consumer Prices Index inflation could fall to 3% by the end of Q1 2012 as the impact of the VAT hike and high oil prices falls away.

The Bank of England said in its latest quarterly Inflation Report released today that CPI inflation - currently at 5% - could fall by as much as 200 basis points as quickly as the end of Q1 next year. In the report the Bank said: "The impact of the rise in VAT is likely to drop out by the end of 2012 Q1. "And, unless oil prices increase significantly again, the direct contribution of petrol prices to CPI inflation should also fall markedly by early 2012. "Together, the direct contribution of VAT and petrol prices to CPI is likely to decrease by around 1.5 to two percentage points b...