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| Inflation could break 3% barrier | Inflation could break 3% barrier |
| (about 1 hour later) | |
| The latest rate of inflation will be announced later, and some analysts expect it to have risen more than 1% above the Bank of England's target. | The latest rate of inflation will be announced later, and some analysts expect it to have risen more than 1% above the Bank of England's target. |
| It could have risen above 3% in May - which would force the bank to explain why consumer prices are so high. | It could have risen above 3% in May - which would force the bank to explain why consumer prices are so high. |
| Rising oil and food prices have pushed up the cost of living, while the UK's economic growth has slowed. | Rising oil and food prices have pushed up the cost of living, while the UK's economic growth has slowed. |
| In April, the Consumer Price Index (CPI) rose unexpectedly from 2.5% to 3%, the biggest rise for six years. | In April, the Consumer Price Index (CPI) rose unexpectedly from 2.5% to 3%, the biggest rise for six years. |
| Some analysts predict CPI in May to be as high as 3.2%. | Some analysts predict CPI in May to be as high as 3.2%. |
| This would almost certainly be the first of several letters Howard ArcherEconomist Are you feeling the credit crunch? class="" href="/1/hi/business/7457726.stm">Viewpoint: Sir Alan Budd | |
| Rising inflation has affected many of the world's leading economies, and the UK has been among those affected. | Rising inflation has affected many of the world's leading economies, and the UK has been among those affected. |
| "Having leapt unexpectedly in April, there is a serious chance that consumer price inflation will move higher in May," said Vicky Redwood, an analyst at Capital Economics. | "Having leapt unexpectedly in April, there is a serious chance that consumer price inflation will move higher in May," said Vicky Redwood, an analyst at Capital Economics. |
| If inflation rises more than 1% above the government's 2% target, the Bank of England governor must write a letter to the government to explain what action it is taking to control consumer prices. | If inflation rises more than 1% above the government's 2% target, the Bank of England governor must write a letter to the government to explain what action it is taking to control consumer prices. |
| Mervyn King and his colleagues are likely to blame international commodity price hikes. | Mervyn King and his colleagues are likely to blame international commodity price hikes. |
| He has only had to write such a letter once before, in April 2007. | He has only had to write such a letter once before, in April 2007. |
| "This would almost certainly be the first of several letters, as consumer price inflation looks well set to reach 4% this summer before starting to fall back late in the year," said Howard Archer, UK economist at Global Insight. | "This would almost certainly be the first of several letters, as consumer price inflation looks well set to reach 4% this summer before starting to fall back late in the year," said Howard Archer, UK economist at Global Insight. |
| Economic slowdown | Economic slowdown |
| But the UK Monetary Policy Committee is in a tight spot. | But the UK Monetary Policy Committee is in a tight spot. |
| Analysts warn that raising interest rates to curb inflation would dampen an economy already dented by slowing growth and a weakening housing market. | Analysts warn that raising interest rates to curb inflation would dampen an economy already dented by slowing growth and a weakening housing market. |
| But Mr King and his colleagues will need to be convinced that the inflationary threat has passed before they contemplate cuts in interest rates - despite pleas from those struggling in the housing market. | But Mr King and his colleagues will need to be convinced that the inflationary threat has passed before they contemplate cuts in interest rates - despite pleas from those struggling in the housing market. |
| Consumers and companies are feeling the effects of higher energy and food bills. | Consumers and companies are feeling the effects of higher energy and food bills. |
| Oil prices have nearly doubled over the past year and on Monday, the price hit a fresh high close to $140 in New York trade. | Oil prices have nearly doubled over the past year and on Monday, the price hit a fresh high close to $140 in New York trade. |
| UK consumer price inflation for May is due at 0930 BST. | UK consumer price inflation for May is due at 0930 BST. |