Soaring food and fuel bills pushed up Britain's inflation rate by its biggest amount in nearly six years to 3%, new figures show today, which will likely further dent hopes of interest rate cuts.
The Office for National Statistics said consumer prices leapt 0.8% last month, pushing the annual rate up by half a percentage point to 3%. Analysts had expected a rate of 2.6%.
The news means that Bank of England Governor Mervyn King is now a whisker away from having to write to the government explaining how he plans to bring inflation back to target.
Coming on top of very strong producer price inflation data yesterday, the CPI figures further highlight the dilemma faced by policymakers with rising prices and a slowing economy.
The Bank of England, which had the CPI figures for its policy meeting last week, has already cut interest rates three times since December in order to shore up the flagging economy.
Most analysts had expected another cut in June but may now start revising that view in light of the latest figures. The bank publishes its new forecasts tomorrow.
