This forecast represents a deterioration from the previous MPC forecast of November 2016 and is mainly based on the assumption for higher international oil prices which impact on the domestic fuel prices and more than offset the more favourable exchange rate assumption. By contrast, the forecast for core inflation remains unchanged, averaging 5,5 per cent and 5,2 per cent in 2017 and 2018 respectively.
10  In the most recent MPC statement, published last month, we noted that the inflation forecast is a cause for concern but that the main drivers of this deterioration are supply-side shocks, in particular oil and food prices.