Bank chief Carney may have to write to chancellor as price of oil falls and supermarkets try to cap price of food
Mark Carney hasnt yet had to write to the chancellor to explain why the Bank of England has missed its 2% inflation target by more than a percentage point, but he will know the form. The governor must say why inflation has moved so far from the target and state what action, if any, the monetary policy committee intends to take.
Inflation, on the CPI measure, fell to 1.2% in September, so a letter is a real possibility if current trends persist. It would be easy for Carney to describe the causes of low inflation. The price of oil has fallen 25% in a matter of months, affecting everything from the price of airline tickets to consumers energy prices. The beleaguered supermarkets are doing their bit to cap the price of food. And the pound has been strong.