In the medium term, "external price pressures fade and a gradual revival in productivity growth curbs increases in domestic costs, " the report said.

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And if that is not yet reflected in profits and share price, it is the inclement external environment that's to blame.

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And positive external shocks (such as a rise in the price of an exported commodity) tend to hasten growth that quickly fizzles out.

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The Bank has resisted calls to raise interest rates - seen as the most effective policy tool in combating inflation - on the basis that temporary, external factors, such as rising oil and food costs, are driving price rises.

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"The bank has made it clear that it also needs to see a sustained drop in consumer price inflation and, perhaps most importantly, a run of better external deficit numbers, " he added.

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