Inflation figures could reach “3 per cent”

Date: London, 15 Dec 2009

- CPI hit 1.9 per cent for November –

Inflation figures edged closer to the Bank of England’s 2 pc target today, as the Consumer Price Index hit 1.9 pc for November, compared with 1.5 pc in October. This a slight rise from city forecasts for a month on month rise of 0.2 pc.

Mark Bolsom, Head of UK Trading Desk at Travelex, the FX payments specialist, suggested inflation figures could climb as high as 3 per cent in the upcoming months. “We expect figures to continue climbing, as rising oil prices, a weaker pound and the reversal in VAT have caused inflationary pressure. We could very well see consumer price inflation hitting the 3 pc mark early next year.”

Despite this, the Bank of England remains calm about rising consumer prices, indicating that it expects the rise to be temporary.

However, Bolsom says, “As the world comes out of recession, demand for raw materials goes up, as do prices, which in turn has a knock on affect on inflation. Stronger oil prices have had an upward impact on inflation figures and we expect this to continue rising.”

Bolsom suggests CPI data supports the forecast that UK interest rates will hold at 0.5 pc until at least 2011 – and perhaps beyond this – and also “vindicates the MPC’s decision not to extend its quantitative easing programme, as a lower number would have given them further scope to pump more money into the financial system.”

Ends

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Jessica Buttress
Head of PR for Travelex Global Business Payments UK
0208 415 4204
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Jessica.buttress@travelex.com

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About Travelex

Founded in 1976, Travelex is the world’s largest non-bank foreign exchange and payments specialist; with operations across four continents and 6,000 employees worldwide.

Travelex holds key positions in its three main areas of activity: Global Business Payments (TGBP, which includes Travelex Personal Payments), Currency Services and Card and Mobile Payments. Every year, more than 35,000 corporate clients and 30 million customers trust Travelex to manage their foreign exchange requirements.

Recently recognised by TowerGroup research as Industry Leader for payments innovation for SMEs, Travelex currently handles international payments worth £40 billion annually for over 750 large corporate and financial institutions.

Visit www.travelexbusiness.com/uk for more information or email the press office at Jessica.Buttress@travelex.com