UK inflation rate rises to 4.4%

2011-03-22 15:21:22

22 March 2011 Last updated at 14:22 Share this page Delicious Digg Facebook reddit StumbleUpon Twitter Email Print UK inflation rate rises to 4.4% in February

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But she suggested that a rise in interest rates should bring the rate of inflation under control.

"Provided that interest rates start to increase by 25 basis points [0.25%] per quarter from August, in line with our expectations, then we believe inflation will average 2% next year," she added.

For its part, the British Chambers of Commerce (BCC) urged the Bank of England to remain cautious.

"The MPC must be careful before it takes action that may threaten the fragile recovery, particularly in the face of a tough austerity plan," said David Kern, BCC chief economist.

"It is likely that the MPC will look to restore its credibility and so we can expect interest rates to be raised in the next few months.

"However, we urge the Committee to move cautiously, and avoid premature measures that may cause an economic setback." he added.

Public borrowing

Meanwhile, the ONS also announced that public sector borrowing last month was £11.8bn, a record for the month of February.

The official figure was nearly double the £6.9bn forecast by economists.

The increase in public sector spending may mean that Chancellor George Osborne has less room for extra spending when he delivers the Budget on Wednesday.

"Today's batch of public finance and inflation numbers remind us that the unusual combination of low growth and above target inflation are bad news for the chancellor," said the BBC's economics editor, Stephanie Flanders.

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