Inflation will fall back: BoE's King

The Bank of England's Governor yesterday reiterated his view that inflation will fall back towards its target of 2 per cent target during the next couple of years.

Sir Mervyn King said the factors that have underpinned recent price rises, such as the depreciation in sterling in 2007 and 2008, rising commodity prices and changes in the standard rate of VAT, would ease over the period.

"The most likely outcome is that these factors will not continue to push up the price level in the future," he wrote in the Bank's annual report.