Bad news, Darling...

Last Modified: 17 Jun 2008
By: Bridgid Nzekwu

Rising food and fuel prices have sent inflation rising to 3.3 per cent with the Bank of England warning it could go well over 4 per cent

High food and fuel costs caused inflation to jump last month to its largest level since Labour came to power in 1997.

Adding to the grim economic news was a warning from the Governor of the Bank of England that inflation will rise again sharply in second half of this year to above 4 per cent

CPI, the bank's target measure of inflation, rose from 3.0 per cent to 3.3 per cent - point three per cent above the government's target.

And RPI, which includes housing costs, was up point 1 per cent to 4.3 per cent.

Read the letters in full

Read the exchange of letters between Mervyn King and Alistair Darling in full:
16 Jun 2008: Mervyn King writes to Alistair Darling
17 Jun 2008: Alistair Darling's reply to Mervyn King

For only the second time Mervyn King was forced to write an obligatory letter to Alistair Darling explaining why inflation was 1 per cent above the government's 2 per cent target.

The governor told the chancellor it was uncertain whether interest rates would have to rise to tackle the rise.