Inflation hit 3.1 per cent in March prompting speculation of a quarter point interest rate rise next month.
The Bank of England governor Mervyn King has therefore been forced to write to the Chancellor to explain why CPI inflation is over a percentage point above the 2 per cent target.
In the letter, King says that a possible interest rate rise from the current 5.25 per cent level will be considered when the Monetary Policy Committee meets in May.
Abbey chief economist Barry Naisbitt says: “Today’s figures on inflation were an unpleasant surprise. Financial markets have now firmed up their view of another base rate rise next month. The Bank of England’s Inflation Report next month will be critical in informing markets of the extent to which the bank still expects inflation to fall in the second half of this year after today’s unexpected figure.”