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| Inflation rate 'at 11-year high' | |
| (20 minutes later) | |
| New inflation figures are expected to show the rate of price rises has reached an 11-year high. | |
| A week after householders were hit by another rise in interest rates, some City analysts predict the inflation rate for December will be close to 3%. | A week after householders were hit by another rise in interest rates, some City analysts predict the inflation rate for December will be close to 3%. |
| The target rate is 2% - but if it goes above 3%, the Bank's governor Mervyn King would have to write a letter of explanation to the government. | The target rate is 2% - but if it goes above 3%, the Bank's governor Mervyn King would have to write a letter of explanation to the government. |
| This would be for the first time since the Bank gained independence in 1997. | This would be for the first time since the Bank gained independence in 1997. |
| 'Upward risk' | 'Upward risk' |
| The latest inflation rate - or Consumer Prices Index for December as it is formally called - was known to the Bank of England before it made the decision last Thursday to raise interest rates to 5.25%. | The latest inflation rate - or Consumer Prices Index for December as it is formally called - was known to the Bank of England before it made the decision last Thursday to raise interest rates to 5.25%. |
| Inflation reached a 10-year high of 2.7% in November - the seventh consecutive month it was above the 2% target. | Inflation reached a 10-year high of 2.7% in November - the seventh consecutive month it was above the 2% target. |
| Early predictions suggested it could nudge up to at least 2.8% in December. | Early predictions suggested it could nudge up to at least 2.8% in December. |
| Malcolm Barr, of JP Morgan Chase Bank, is expecting the figure to come in at 3%, along with ING economist, James Knightley. | Malcolm Barr, of JP Morgan Chase Bank, is expecting the figure to come in at 3%, along with ING economist, James Knightley. |
| Investec economist, Philip Shaw, who initially, predicted a more modest rise to 2.8% before the base rate increase has since admitted there is an "upward risk" on this figure, possibly to as high as 3.1%. | Investec economist, Philip Shaw, who initially, predicted a more modest rise to 2.8% before the base rate increase has since admitted there is an "upward risk" on this figure, possibly to as high as 3.1%. |
| He said: "It is fairly easy to see it going up to 2.9% or 3%, but 3.1% is also possible, although you'd need a huge surge in food prices in particular to get that sort of jump." | He said: "It is fairly easy to see it going up to 2.9% or 3%, but 3.1% is also possible, although you'd need a huge surge in food prices in particular to get that sort of jump." |
| If the rate does exceed the 3% mark, Mr King would publish the explanatory open letter to Chancellor Gordon Brown at 1030 GMT. | If the rate does exceed the 3% mark, Mr King would publish the explanatory open letter to Chancellor Gordon Brown at 1030 GMT. |
| He would be required to state what action was being taken to move the rate back in line with the 2% goal. | He would be required to state what action was being taken to move the rate back in line with the 2% goal. |
| Mr King would also need to predict how long it would take to return inflation to target and explain how the Bank of England was meeting the government's monetary policy objectives. | Mr King would also need to predict how long it would take to return inflation to target and explain how the Bank of England was meeting the government's monetary policy objectives. |