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UK inflation soared to 4.4% in January, taking it to the highest level since the current measure began in 1997.

The rate of inflation rose by 0.6% in July alone, the biggest single increase over the same period.

Much of the increase was due to rising energy and food prices, which have now risen 13.7% year-on-year on the back of a surge in the cost of meat.

The Bank of England's quarterly inflation report warned inflation was likely to continue to rise to 5%, before dropping back.

The data will scupper any hope that the Bank of England will cut interest rates for the foreseeable future and raises the possibility of a rise to help bring inflation under control.

But analysts expect commodity prices to stablise by the end of the year, meaning interest rate cuts may once again be a possibility.
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Post Date: August 13th, 2008

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