Prime Minister David Cameron said on Friday he hoped inflation in Britain would fall in 2012 but said the rebalancing of the country's economy had not gone as fast as he would have liked.
Inflation has been stubbornly high and that had an effect on household income last year and so consumers felt particularly squeezed. Looking into 2012 one of the trends I hope to see happen is a fall in the level of inflation and so therefore households feeling under less pressure than they did in 2011, Cameron told BBC radio.
But he said it was going to be a difficult year, it's a testing year.
Britain's economy needed a rebalancing away from government spending, excessive borrowing, financial services and consumption and towards business investment, export and manufacturing, he said.
In places there is a rebalancing taking place but it's not going as far and as fast as I would like it to and we need to do better on that front, he said.
(Reporting by Adrian Croft; editing by Keith Weir)