Governor Mark Carney said that an increase from the record low of 0.5 per cent is on the cards because the strength of the UK economy.
He told MPs: “The point at which interest rates rise is moving closer.”
The governor’s comments came as official figures showed summer clothing discounts and ongoing supermarket price wars helped drag inflation back to zero last month.
The Office for National Statistics said the Consumer Price Index measure of inflation slipped back from 0.1 per cent in May.
CPI has been hovering around zero since February, providing an extra boost to households as wage increases accelerate. Data out tomorrow is expected to show a further improvement.
The Bank expects CPI – which fell below zero in April for the first time in more than 50 years – to turn higher later this year as the effect of falling oil and food prices fades.
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