Bank of England warns of 3.6-pct inflation

AFP, May, 2008

LONDON (AFP) — The Bank of England warned on Wednesday that inflation, which hit 3.0 percent last month, could spike to 3.6 percent this year owing to soaring energy and food prices.

The BoE also predicted in its latest quarterly report that the economy would slow sharply this year amid the spreading impact of the global credit crunch.

Central bank governor Mervyn King, speaking after publication of the report, hinted that the economy could slip into a technical recession -- which is defined as two quarters running of declining output.

King said at a press conference that there could be an "odd quarter or two" of negative growth.

In the report, the BoE forecast that Britain's annualised gross domestic product (GDP) growth would dip towards 1.0...