Mervyn King has said that the squeeze on UK take-home pay is necessary. Speaking in Newcastle, the Bank of England governor said the current high inflation rate was unavoidable as the UK economy adjusts to higher commodity prices and becomes more competitive. He said inflation was likely to rise further to 4-5% in the coming months, before falling back sharply from 2012. And he implied that the Bank would thwart attempts by wage-setters to keep up with the above-target price rises. "Further rises in world commodity and energy prices cannot be ruled out," he said in his speech.