Speaking to journalists this morning Mervyn King, governor of the Bank of England revealed the consumer prices index rate of inflation is unlikely to fall to its 2% target till mid-2013 and will be around 2.5% at the end of this year.
The gloomy forecast was linked partly to the worsening eurozone crisis which King called the greatest threat to UK recovery.
He said: "The economy will continue to face strong headwinds over the forecast period.
"Underlying concerns about balance sheets, especially in the financial sector with its exposure to the euro area, mean that the path of recovery is likely to be slow and uncertain."
Meanwhile unemployment figures out today revealed a slightly rosier picture with the employment rate for those aged from 16 to 64 at 70.5% up 0.2% on the quarter – though this was entirely down to rising levels of part time employment.
There were 29.23m people in employment aged 16 and over, up 105,000 on the quarter, the Office for National Statistics revealed.
The unemployment rate was 8.2% of the economically active population, down 0.2 on the quarter with 2.63m unemployed people, down 45,000 on the quarter.
Total pay including bonuses rose by 0.6%on a year earlier.
This is the lowest growth rate since March-May 2009 and it is down 0.5% on the three months to February 2012.
Regular pay excluding bonuses rose by 1.6% on a year earlier, unchanged on the three months to February 2012.
