Tuesday, February 15, 2011

U.K.'s Inflation Jumps to 4.0%: Twice the Target

The UK's inflation reached double the target of the Bank of England (BOE) in January, increasing pressure for the central bank to raise interest rates. According to the Office for National Statistics, the consumer price index rose 4.0% compared with January last year after an annual high of 3.7% in December. That was the biggest advance since November 2008.

The main factors behind the high inflation were the crude oil costs and rising sales tax.

The chairman of the BOE Governor Mervyn King today will send an open letter to British finance minister, George Osborne, to explain how the central bank will react to inflation so far above the mid-term target of 2.0%.

Compared to December, prices rose 0.1% in January. This was the first time that there was an increase in inflation from January to December since records started being made in 1997.

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