Outlook for prices 'very uncertain

The rate of inflation over the next year remains highly uncertain even though it has been surprisingly low this year, Bank of England monetary policy committee member Richard Lambert said yesterday.

Consumer price inflation fell to 1.1% in September, well below the Bank's government-set target of 2%.

"The likely path over the coming year is, however, uncertain. The MPC will keep an open mind, and will make its decisions according to how the data and the business surveys unfold," he told an audience in Glasgow.

City economists are becoming increasingly convinced that interest rates have peaked at the current level of 4.75%, especially after a weak third-quarter growth figure.

Mr Lambert said wage inflation in the jobs market would be crucial.