The Bank of England, as well as consumers, is to have trouble with inflation this year according to a City fund manager.
Inflation is to continue hitting Britain's consumers in the pocket and causing damage to economic growth, a top City expert has claimed.
Ted Scott, manager of the popular-with-investors F&C Growth & Income Fund, made the comments following new figures from the Bank of England.
According to the central bank, inflation will rise to 3.7 per cent this year, well above its government-imposed target of two per cent.
Earlier this week, British Gas indicated that it would put its energy tariffs up by ten to 20 per cent due to high wholesale costs.
Crude oil is currently trading for around $120 per barrel, a historic high which, commodities experts have said, is likely to be raised to $200 in months to come.
Mr Scott advised investors that this "inflationary pressure" was likely to have a significant affect on the bank's monetary policy this year.
"The Bank of England is in an awkward situation," the investments expert commented.
"They would like to be in a position to lower interest rates further but so far they have been tentative in their monetary policy by only lowering rates gradually, in contrast with the Federal Reserve [in America] which has been much more aggressive."
The pound's continuing weakening against the Euro and the fact that it has begun to decline against the dollar were also cited by the expert as exacerbating the problem.
"[Bank governor] Mervin King's position is far from easy", Mr Scott concluded.
