British inflation hits 16-year high

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British inflation hits 16-year high

Tue 17th Jun 2008

Inflation in the UK reached a 16-year high of 3.3 per cent in May, official data shows.

Bank of England governor Mervyn King is now required to write an open letter of explanation to chancellor Alistair Darling.

The Office of National Statistics said the largest upward pressure was from food and non-alcoholic drinks, mainly meat and vegetables.

Also pushing up the cost of living were gas, electricity and heating oil prices and recreation and culture goods and services.

Books, newspapers and stationery also listed as upward pressures, along with foreign holidays.

David Kern, economic advisor to the British Chambers of Commerce (BCC), said the BCC realised it was not possible now for the Bank of England's monetary policy committee (MPC) to consider immediate interest rate cuts.

But he added that calls for higher interest rates "should be rejected at this stage", and that the BCC expected inflation to fall sharply towards the end of the year.

He said the BCC urged the MPC to keep a "cautious approach" and "keep rates unchanged next time around."

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