Inflation hike

The government is under pressure after inflation jumped to four per cent in January.

The UK consumer price index (CPI) increased from the December rate of 3.7% to four per cent last month - double the Bank of England's 2% target.

The retail prices index (RPI) inflation also rose from 4.8% to 5.1%.

The spike will intensify pressure on Mervyn King, governor of the Bank of England, to raise interest rates. Two out of nine members of the Bank's monetary policy committee voted for a rise last month.

Rising food and oil prices are largely behind the high inflation rate. Mr King has so far resisted an increase in interest rates for fear it would damage the recovering economy further and hurt families struggling with mortgage payments.

The governor will write a letter to chancellor George Osborne explaining why inflation is now double his intended target.


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