Inflation up to 3.1%; a letter is required forthwith
The Governor of the Bank of England, Mervyn King, will have to write a letter of explanation to the Government after the rate of UK consumer price inflation rose sharply to 3.1% last month.
The Consumer Prices Index (CPI) is now more than 1% above the Government’s target of 2% and, given that this is the case, a letter is required from the Bank of England to the Government giving a full explanation for the situation.
Figures from the Office of National Statistics (ONS) also show that the wider measure of inflation, the Retail Price Index (RPI), rose to 4.8% in March, up from 4.6% in February.
Many analysts believe that the figures could spark more interest rate rises as the Bank of England tries to bring inflation under control.
“I expect the rate to rise again in May,” said City analyst Colin Perry. “The Government has a morbid dread of inflation and will want the Bank of England to do all in its power to keep the lid on it. If inflation runs out of control, Gordon Brown’s excellently run economy will be in danger – and so could his leadership bid.”
The ONS said that CPI inflation jumped 0.5% over the month, with rising prices for milk, petrol and furniture the main drivers behind the increase.