Inflation hits rate cut prospects
Updated on 13 May 2008
Today's news of a surprise leap in inflation, to three per cent, reduces the chances of an interest rate cut. Faisal Islam reports.
So the chancellor is borrowing an extra £2.7bn this year to solve the government's political crisis over the 10p tax rate.
But much of that cash will go to middle-income earners who were not even affected by the changes.
The government says the giveaway is justified by the pressure on family budgets from rising food and oil prices.
And today saw a surprise leap in inflation to three per cent. The news severely reduces the chances of a rate cut by the Bank of England.
