UK inflation has hit 3.5%, prompting Mervyn King to write a letter of explanation to the Chancellor.
In his letter, the Bank of England's Governor says the hike in inflation is largely due to the restoration of VAT at 17.5% and high oil prices.
Inflation measured by the Consumer Prices Index (CPI) increased from 2.9% in December to 3.5% last month. The change is in line with the Bank of England's inflation predictions, published earlier this month.
The 0.6% rise in CPI is the second largest-ever increase between two months.
However, the Retail Prices Index (RPI) measure of inflation fell back, down to 3.7% from 3.8% at the end of 2009.
Monetary Policy Committee members believe the increase in inflation is temporary, driven largely by the VAT increase, and will fall back below the 2% target by the end of 2010.
King says the Bank of England remains prepared to tighten monetary policy should inflation show signs of rising above target over the medium-term.
Liberal Democrat Shadow Chancellor Vince Cable says the inflation figure represents a "stark reminder" the UK remains in "very uncertain times".
"The Bank of England's explanation of this as a temporary blip is welcome but there is a danger that inflation will stay high while growth remains low," he says.
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