Interest rate rise fear rises

The latest inflation-related statistics have sparked fears of a hike in interest rates as the Bank of England faces increasing inflation.

Factory gate prices rose to an annual rate of 8.9 per cent, revealed yesterday, the highest level since the figures began being recorded 22 years ago.

This follows last month's jump in consumer prices index inflation to three per cent, the highest it can go without the Bank of England governor Mervyn King having to write a letter to the chancellor explaining how the monetary policy committee will act to bring inflation down.

Markets have reacted to the latest developments by pricing in three rises in interest rates before the end of 2008, talking the base rate back up to 5.75 per cent.

Those concerned at possible rising costs of mortgages and keen on keeping costs down may consider the self build method as a potentially cheaper alternative.

May's inflation figures will be revealed by the Bank of England on June 17th.