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| Version 8 | Version 9 |
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| UK inflation rate at 11-year high | UK inflation rate at 11-year high |
| (about 4 hours later) | |
| UK inflation jumped to an 11-year high of 3% in December, raising the prospect of more interest rate increases. | UK inflation jumped to an 11-year high of 3% in December, raising the prospect of more interest rate increases. |
| Official figures showed that higher fuel costs helped to push the Consumer Prices Index up from 2.7% in November. | Official figures showed that higher fuel costs helped to push the Consumer Prices Index up from 2.7% in November. |
| An increase had been expected following last week's shock rise in UK interest rates to 5.25%, but the rise was larger than analysts had forecast. | An increase had been expected following last week's shock rise in UK interest rates to 5.25%, but the rise was larger than analysts had forecast. |
| Prime Minister Tony Blair said higher oil prices had driven inflation, and forecast CPI would fall to 2% in 2007. | Prime Minister Tony Blair said higher oil prices had driven inflation, and forecast CPI would fall to 2% in 2007. |
| "The underlying position of the British economy, even with the recent interest rate rise, is one of strong economic growth, historically very low interest rates, inflation under control and employment and living standards high," Mr Blair said at his monthly press conference. | "The underlying position of the British economy, even with the recent interest rate rise, is one of strong economic growth, historically very low interest rates, inflation under control and employment and living standards high," Mr Blair said at his monthly press conference. |
| The Retail Prices Index, which includes mortgage interest payments, rose to 4.4% in December from 3.9%. | The Retail Prices Index, which includes mortgage interest payments, rose to 4.4% in December from 3.9%. |
| The RPI figure - which is often used as a basis for wage demands - is now at its highest level since 1991. | The RPI figure - which is often used as a basis for wage demands - is now at its highest level since 1991. |
| Reaction | Reaction |
| "Now we know why the Bank of England raised interest rates last week," said Howard Archer, chief UK economist at Global Insight. | "Now we know why the Bank of England raised interest rates last week," said Howard Archer, chief UK economist at Global Insight. |
| There remains the real risk that the Bank of England will hike rates again James Knightley, ING Bank How UK inflation is measured | There remains the real risk that the Bank of England will hike rates again James Knightley, ING Bank How UK inflation is measured |
| "This is a pretty unhealthy report all round for the Bank of England to digest, fully justifying the immediate hike in interest rates." | "This is a pretty unhealthy report all round for the Bank of England to digest, fully justifying the immediate hike in interest rates." |
| Analysts said there was now strong chance of further interest rate rises. | Analysts said there was now strong chance of further interest rate rises. |
| "Given evidence suggesting that wage rises are picking up, there remains the real risk that the Bank of England will hike rates again," said James Knightley, an economist at ING Bank. | "Given evidence suggesting that wage rises are picking up, there remains the real risk that the Bank of England will hike rates again," said James Knightley, an economist at ING Bank. |
| The Bank can't afford to take a chance and dismiss this spike as a mere blip Evan Davis analysis | |
| "We would expect any move to come in the next two months." | "We would expect any move to come in the next two months." |
| Meanwhile Investec economist Philip Shaw predicted the Bank would add another 0.25 point rise - "possibly as early as next month". | Meanwhile Investec economist Philip Shaw predicted the Bank would add another 0.25 point rise - "possibly as early as next month". |
| Petrol costs | Petrol costs |
| The Office for National Statistics said the largest upward impact on prices in December came from transport costs. | The Office for National Statistics said the largest upward impact on prices in December came from transport costs. |
| These were lifted by rising petrol prices, partly reflecting the fuel duty increase unveiled by Gordon Brown in the pre-Budget report. | These were lifted by rising petrol prices, partly reflecting the fuel duty increase unveiled by Gordon Brown in the pre-Budget report. |
| HAVE YOUR SAY The higher gas bill has been the hardest thing to deal with in the last year Leah Ronaldson, Edinburgh Send us your comments | HAVE YOUR SAY The higher gas bill has been the hardest thing to deal with in the last year Leah Ronaldson, Edinburgh Send us your comments |
| The Bank of England is tasked with keeping CPI inflation at the government's target rate of 2%, but it has now exceeded this level for eight months in a row. | The Bank of England is tasked with keeping CPI inflation at the government's target rate of 2%, but it has now exceeded this level for eight months in a row. |
| If CPI inflation should rise above 3%, the Bank's governor Mervyn King would have to write a letter of explanation to the government - the first time since the Bank gained independence in 1997. | If CPI inflation should rise above 3%, the Bank's governor Mervyn King would have to write a letter of explanation to the government - the first time since the Bank gained independence in 1997. |
| "Given that the CPI is generally a lagging indicator, we can expect inflation in the UK to climb further in the short term, taking us well above the Bank's 2% target," said Martin Slaney, of GFT Global Markets. | "Given that the CPI is generally a lagging indicator, we can expect inflation in the UK to climb further in the short term, taking us well above the Bank's 2% target," said Martin Slaney, of GFT Global Markets. |
| "Although Bank of England governor Mervyn King will not be obliged to write that `Dear Chancellor' letter just yet, his pen will be poised." | "Although Bank of England governor Mervyn King will not be obliged to write that `Dear Chancellor' letter just yet, his pen will be poised." |