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Rate rise fears as inflation hits 4.4%

The consumer price index annual inflation rate jumped to 4.4 per cent in February, its highest level since 2008, according to figures from the Office for National Statistics.

The rate is up from 4 per cent in January and has been driven by domestic heating costs and clothing.

The retail price index is now at 5.5 per cent, up from 5.1 per cent in January.

The increases may place pressure on the Bank of England to raise interest rates.

Last month, Bank of England governor Mervyn King said: “Inflation is likely to continue to pick up by between 4 per cent and 5 per cent over the next few months.”

He said the rise reflects an increase in world commodity and energy prices and that as the effect of that wanes, inflation will fall back in 2012.

Rathbone Unit Trust Management fixed-income investment director Bryn Jones says: “Today’s inflation figures reinforce our view that the Bank of England could raise interest rates as early as next month, or around the next quarterly inflation report at the latest.”

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