The Bank of England has claimed for the first time that it has taken a conscious decision to "accept a temporary period of above-target inflation" – words that analysts queried as an accurate account of the Bank's recent behaviour.
In a speech in Belfast, the deputy governor for monetary policy, Charlie Bean, also warned of risks to Britain from the eurozone. "The countries of the periphery are struggling with a mixture of fiscal, banking and competitiveness problems," he said. "There is a risk that this could lead to renewed banking sector turbulence and a hit to confidence more generally, with adverse consequences for us."
On inflation, Mr Bean said: "The MPC's chosen approach has been to accept a temporary period of above-target inflation, rather than seeking to hold inflation as close to the 2 per cent target as possible at all times."
Michael Saunders, an economist at Citibank, countered that "rather than having 'chosen' to accept above-target inflation, a more accurate description in our view is that the Monetary Policy Committee failed to forecast the scale and persistence of the inflation overshoot".
Nor did Mr Bean necessarily bolster faith in the Bank's credibility by his cheerful admission that he found trends in productivity and spare capacity in the economy "somewhat puzzling".
He reiterated concerns that UK commerce and industry had often been unable to provide substitutes for imported goods and services even when they had become more expensive, saying the Bank found this "somewhat disappointing".
Data from the CBI and the Society of Motor Manufacturers and Traders (SMMT) does suggest that industrial output is picking up. The CBI's Industrial Trends survey shows fuller order books, rising exports and an easing in selling prices as the drop in commodity costs feeds through to inflation.
The SMMT added that vehicle production was up 5.8 per cent on the start of the year, with 80 per cent for export, although output in April had been disrupted by shortages of components from Japan.
Howard Archer, an economist at IHS Global Insight, said: "The concern is that manufacturers will find life increasingly challenging over the coming months as stock rebuilding wanes and tighter fiscal policy weighs on demand."