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Inflation will drop - Mervyn.

FAMILIES facing the biggest squeeze on household incomes since the 1930s should expect some respite from high inflation next year, Bank of England governor Sir Mervyn King said last night.

Sir Mervyn said price pressures still remained "subdued" and weakening demand should see prices fall further, despite CPI inflation hitting a three-year high of 5.2% in September.

Spiralling energy tariffs and mobile phone bills were behind the higher inflation rate, which dwarfs average wage growth of 1.8% a year and comes as unemployment is at a 17-year high. The Office for National Statistics said gas and electricity jumped 13% and 7.5% respectively, food shot up 6.4%, communication costs, driven by mobile phone charges, increased 5.9% and transport prices gained 8.9% on a year ago.

Sir Mervyn defended the Monetary Policy Committee's decision to pump an extra pounds 75bn into its quantitative easing programme.
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Publication:Western Mail (Cardiff, Wales)
Date:Oct 19, 2011
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