The Consumer Price Index (the cost of living) rose by 0.3 percentage points to 3.3% during May - the highest reading since the measure was first reported in January 1997. Previous comparable annual inflation readings were last as high in July 1992. The rise above 3.0% meant the Bank of England Governor, Mervyn King had to write an open letter to the government explaining how the central bank would bring inflation back to its 2% target. Mr King added that inflation should peak to around 4% by the end of the year and begin to fall back towards its target “in the absence of further unexpected increases in oil and commodity prices”.
Read the letter from the Bank of England and the Chancellor’s response for more details.
