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Inflation jumps

Feb 16 2010

Inflation soars to 3.5 per cent

The increase in VAT and rises in the price of oil pushed inflation in January up to a 14-month high.

The consumer prices index (CPI) rose by 3.5 per cent, up from 2.9 per cent in December, requiring the governor of the Bank of England to write an open letter to the chancellor.

In the year to January, the retail prices index (RPI) rose by 3.7 per cent, up from 2.4 per cent in December.

A spokesperson from The Centre for Economics and Business Research, a think tank, says: ‘While we expect inflation to remain above target for the next few months, significant competitive pressures in the economy are likely to see inflation fall back in the medium-term.’

David Kern, chief economist at the British Chambers of Commerce (BCC), says: ‘The British economy is still weak, businesses continue to experience numerous pressures, and it would be wrong for the MPC to contemplate a hike in interest rates at this time.’

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