Inflation expected to hit 5% and gloomy outlook from BoE

The annual rate of inflation soared to 4.4% in July, its highest level since records began in 1997. The 0.6% rise from July’s 3.8% rate was also the largest month on month change since records began. The BoE predicts Inflation to peak at 5%, making it hard for the central bank to cut interest rates in the near future.

The Bank of England says it expects the UK economy will not grow at all over the next year or so. In the Bank’s gloomiest assessment yet, governor Mervyn King said that he expected growth “to be flat” and did not rule out a recession.