Inflation could rise above 4% by the end of the year

The Governor of the Bank of England has said that UK inflation could rise above 4% this year – mainly caused by the rising costs of food and energy prices.

The Consumer Prices Index (CPI) rose by 3.3% in May which is up from 3% in April – the fastest rate since the CPI measure began in 1997.

The largest contributor to consumer inflation is the higher price we are paying for our food; mainly meat products and vegetables and non alcoholic drinks. Closely followed by higher energy bills (up 10%), the cost of foreign holidays and the cost of books and stationery is also up.

If prices continue to rise we are likely to see inflation going over 4% in the second half of the year. Experts predict inflation will peak towards the end of the year and gradually fall throughout next year.

The Bank of England is unlikely to cut interest rates until the uncertainty over inflation is more stable.

The Government are advising people over high wage increases, saying anything near or over the rate of inflation will damage people in the long run.