Soaring food and fuel prices pushed Britain's inflation rate to nearly double the central bank's 2% target in June, official data shows today, boosting talk of interest rate hikes ahead.
Consumer price inflation rose more than expected to 3.8% from 3.3% in May, while another two surveys indicated the economy was on the verge of a marked economic slowdown, highlighting the dilemma facing policymakers.
The Royal Institution of Chartered Surveyors and British Retail Consortium showed British house price falls eased slightly in June but market conditions remain bleak, while retail sales fell on a year ago, according to the latest surveys today.
June was the third month in a row that inflation figures have come in above forecasts and the second time in that period that the annual rate has jumped by half a percentage point. Inflation now stands at its highest annual rate since the Bank of England was given the power to set interest rates in 1997.
The biggest contribution came from food and non-alcoholic beverages which rose 2.1% on the month and added 0.18 percentage points to the annual inflation rate.
Core inflation, which strips out volatile items such as food and fuel, rose to 1.6%, the highest since last August. That may concern policymakers worried about potential second-round effects from soaring energy costs. Clothing and footwear prices, however, posted their biggest annual fall since August 2002.
