Bank of England Pressed to Rein in Inflation

Food, energy prices soar, push inflation to highest rate in 16 years
By Jim O'Neill,  Newser User
Posted Aug 13, 2008 10:26 AM CDT
Bank of England Governor Mervyn King gives evidence at the Commons Treasury Committee in House of Commons, London, Tuesday July 22.   (AP Photo)
camera-icon View 2 more images

(Newser) – Great Britain’s inflation rate—driven by energy and food prices rising at the fastest pace in more than 20 years—is on track to hit 5% by autumn, reports the Guardian. The cost of living jumped 0.6% to a 16-year high of 4.4% last month, the largest 1-month jump under the Labor government, boosting pressure on the Bank of England to raise interest rates.

If it does so, the Bank of England would be attempting to bring inflation back to the 2% goal for the year. Food prices have risen some 14% in the past year. Said a Treasury official: "I think everybody recognizes that it is not possible for governments to fully insulate, whether it is households or businesses, from these kinds of world oil prices that we have seen."