Inflation rises again

Hopes of an early interest rate cut may have been dealt a major blow with news that the consumer prices index (CPI) rate of inflation has jumped by half a percentage point in one month.

Data from the Office for National Statistics today revealed that the CPI figure for last month was up to 3.8 per cent, not far short of the four per cent that Bank of England governor Mervyn King suggested the rate may rise to this year.

The largest contributory factor was that of rising food and non-alcoholic drinks, with food up 10.6 per cent.

Petrol was also a major factor, as was domestic fuel and the cost of some leisure equipment such as digital cameras and camcorders.

If rates are kept high because of inflation, those hoping for cheaper mortgages may be disappointed.

An alternative and potentially cheaper way to obtain a home is the self build method.

Yesterday, Bank of England governor Mervyn King admitted to MPs that the monetary policy commitee can at present make "little impact" on the rising level of inflation.