Rapid inflation causes headache for Bank of England

Economists believe the ‘Taylor Swift effect’ could make the Bank of England’s inflation problems even worse.

But they have called on rate-setters to shake it off and think about when to cut rates from 5.25 percent.

‘Swifties’ – the American singer’s fans – spent huge amounts on tickets, travel and hotels during her June concerts in Edinburgh, Liverpool, Cardiff and London. They are also likely to have pushed up inflation in the services sector – a move that has bank officials worried, even though inflation has fallen to 2 percent.

This could mean that the Bank will not lower interest rates on August 1.

This week, the inflation figures for June will be published. Capital Economics predicts inflation will be 1.9 percent, while inflation in the services sector will be 5.7 percent.

Analysts estimate that without Swift, inflation would be 1.8 percent and in the services sector 5.5 percent.