There has been a great deal of recent debate and speculation over the steps that central banks have taken, and might soon take in order to deal with slowing growth, and the European debt crisis.

The outlook for inflation is a key consideration for monetary policymakers, and in this article we present our latest forecasts. We have revised up our forecasts for inflation in both the US and the UK, and we evaluate the possible implications this might have for Central Bank action. In particular, there has been increasing talk in recent weeks about the impact of both oil price rises, and increases in the prices of primary foodstuffs, such as wheat. We consider the likely impact of these changes on inflation in the US, the EA and the UK.

Inflation forecasts for EA, US and UK.

US inflation expected to rise because of oil prices but this will not stand in the way of the Fed.

The euro depreciation has added almost a percentage point to EA inflation.

An upward revision to our UK inflation forecast due to utility prices but little impact for the BoE.

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