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Fears that interest rate rise is imminent
Fears that interest rate rise is imminent
UK consumer inflation rose up to 3.1 per cent in March, sparking fears that interest rates will rise next month.
The Office for National Statistics (ONS) has confirmed the Consumer Prices Index (CPI) increased by three per cent.
Currently the rate is a percentage point higher than the CPI target set by the Bank of England of just two per cent.
Now experts believe interest rates will be brought in line with this leap in inflation.
According to the ONS, a variety of factors had an effect on the bulging inflation levels, including transport and petrol prices.
Global Insight chief UK economist Howard Archer was downbeat in his forecast for future economic trends.
He told the Daily Mail: "This is a thoroughly nasty set of data that essentially guarantees that the Bank of England will raise interest rates by a further 25 basis points to 5.5 per cent in May."
Mervyn King, Bank of England governor, will write to the government to explain the increase as the rate is one per cent above Gordon Brown's suggested target figure.
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