The Governor of the bank of England warned British households faces more squeeze this year as the inflation rises where the real wages fall.
British household spending squeeze this year Bank of England warns, Mark Carney, the head of Bank of England said, the challenging time for British people are on the way, the time is going to be hard as the real wages won’t keep up with the price rises.
But Mr Carney was hopeful for wage growth after 2017, but he said, this will happen if the UK government secures a smooth exit from the European Union.
The news came, Bank of England has trimmed the British economic growth estimates for this year from 2.0 percent to 1.9 percent and it also held the bank interest rates at just 0.25 percent.
The bank unveiled its inflation report for this quarter, which also raised inflation forecast to 2.7 percent from February’s 2.4 percent for rest of 2017.
The total interest rates will be fixed by MPC (Monetary Policy Committee) which is also must keep inflation rate at 2.0 percent.
Mr Carney said, the inflation rise is just due to the weak Pound Sterling and increasing the interest rates won’t be an effective plan to tackle the issue.
The Great Britain Pound Sterling were trading as $1.47 just before the last years June referendum vote but it is now $1.28, that is down by 11 percent.