This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.

You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/7458209.stm

The article has changed 22 times. There is an RSS feed of changes available.

Version 5 Version 6
UK consumer inflation up to 3.3% UK consumer inflation up to 3.3%
(10 minutes later)
Rising food and energy prices have pushed UK consumer inflation up again, the Office for National Statistics (ONS) has said.Rising food and energy prices have pushed UK consumer inflation up again, the Office for National Statistics (ONS) has said.
The Consumer Prices Index (CPI) measure of annual inflation was 3.3% in May, up from 3% the previous month.The Consumer Prices Index (CPI) measure of annual inflation was 3.3% in May, up from 3% the previous month.
The rise means that the governor of the Bank of England must write to the chancellor to explain what it is doing to control price rises.The rise means that the governor of the Bank of England must write to the chancellor to explain what it is doing to control price rises.
The wider Retail Prices Index rose to 4.3% from 4.2% in April, the ONS said. The wider Retail Prices Index rose to 4.3% from 4.2% in April.
The biggest contributor to consumer inflation was the rising price of food and non-alcoholic drinks, the ONS said.
This was mainly due to the increasing cost of meat products, particularly bacon, and vegetables.
Increasing household energy bills were also a significant factor, along with the rising cost of books, stationery and foreign holidays. However, this rise in the cost of leisure and recreation was offset by a fall in the price of DVDs, according to the ONS.
Further rises?
Some analysts have predicted that CPI could reach 4% this year.Some analysts have predicted that CPI could reach 4% this year.
If inflation rises more than one percentage point 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 one percentage point 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.
This would almost certainly be the first of several letters Howard ArcherEconomist Are you feeling the credit crunch?Viewpoint: Sir Alan BuddThis would almost certainly be the first of several letters Howard ArcherEconomist Are you feeling the credit crunch?Viewpoint: Sir Alan Budd
The Bank governor Mervyn King has had to write such a letter to the chancellor only once before, when inflation hit 3.1% in April 2007.The Bank governor Mervyn King has had to write such a letter to the chancellor only once before, when inflation hit 3.1% in April 2007.
Mr King is likely to blame significant rises in international commodity prices.Mr King is likely to blame significant rises in international commodity prices.
"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 slowdownEconomic slowdown
The Bank of England's interest rate-setting committee faces a difficult balancing act.The Bank of England's interest rate-setting committee faces a difficult balancing act.
Richard Scott explains some of the factors pushing up inflationRichard Scott explains some of the factors pushing up inflation
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.
At its latest rate-setting meeting on 5 June, the Bank left its main interest rate unchanged at 5%.At its latest rate-setting meeting on 5 June, the Bank left its main interest rate unchanged at 5%.
The MPC had already cut interest rates three times since December in an attempt to help the slowing economy.The MPC had already cut interest rates three times since December in an attempt to help the slowing economy.
However, 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.However, 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.
The European Central Bank, which sets interest rate policy for the 15 nations using the euro, warned earlier this month that inflation remained its biggest concern and that it would raise rates if it felt price stability was under threat.The European Central Bank, which sets interest rate policy for the 15 nations using the euro, warned earlier this month that inflation remained its biggest concern and that it would raise rates if it felt price stability was under threat.
Passed onPassed on
Consumers and companies are already feeling the effects of higher energy and food bills.Consumers and companies are already 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 of almost $140 in New York.Oil prices have nearly doubled over the past year and on Monday the price hit a fresh high of almost $140 in New York.
That in turn has pushed up the cost of petrol and diesel, prompting many people to rein in their spending in other areas.That in turn has pushed up the cost of petrol and diesel, prompting many people to rein in their spending in other areas.
At the same time, many food prices have surged to record levels because of increased demand and inclement weather in key producer nations.At the same time, many food prices have surged to record levels because of increased demand and inclement weather in key producer nations.