The Bank of England has admitted that inflation is unlikely to fall as quickly as it had previously hoped, according to its latest Inflation Report.

Members of the Monetary Policy Committee had previously stated that they expected inflation to fall to its two per cent target by the end of the year.

Inflation had begun to gradually fall from its 5.2 per cent peak in September to 3.4 per cent but last month increased again to 3.5 per cent.

Governor of the Bank of England Mervyn King described the events as ‘painful’.

He said: “Inflation has fallen back sharply from its peak in September last year but remains well above the two per cent target and is more likely than not to be above target until the middle of next year.”

“Weak growth and high inflation have been the unavoidable consequences of the financial crisis, developments in global commodity prices and the need to rebalance our economy. That has been painful for everyone.”

Mr King said high inflation was due to higher energy prices, indirect taxes and cost pressures from past rises in global commodity prices.

He also said the outlook for future growth had weakened since the previous report in February and that the UK economy would continue to ‘face strong headwinds’.

Mr King said the poor growth outlook was due to a slower than expected recovery in take-home pay and weakness in productivity growth.