February 4, 2011 / 9:35 AM / 9 years ago

Inflationary pressures up to 5-month high in December - ECRI

BANGALORE (Reuters) - Inflationary pressures in Britain rose to a five-month high in December, according to an indicator from the Economic Cycle Research Institute designed to predict inflation trends.

New York-based economic forecaster ECRI said its United Kingdom Future Inflation Gauge (UKFIG) rose to 103.9 in December from 103.3 in November.

“With the UK Future Inflation Gauge rising to a five-month high, underlying inflation pressures have begun to re-emerge.” said Lakshman Achuthan at ECRI.

Inflation in Britain, which hit an 8-month high of 3.7 percent in December, is expected to rise further and stay well above 3.0 percent in each quarter of this year, according to the January Reuters UK outlook poll.

Citing preliminary data that said Britain’s economy unexpectedly shrank 0.5 percent in the last quarter of 2010, analysts said the patchiness of the recovery would probably suppress urges among most policymakers to raise rates sooner.

The latest Reuters survey of 70 economists showed they expect the Bank of England to keep rates on hold at a record low of 0.5 percent until the final quarter of the year, when they see a hike to 0.75 percent.

Reporting by Namrata Anchan

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