Inflation rate could hit 4% peak - New Star

Increases in food and fuel costs led the cost of living rate to surge from the 2.5% recorded in March to well above the 2.6% forecast for last month, and just 0.1% below the level Governor Mervyn King would have to write to the Chancellor to explain. New Star’s previous forecast was that inflation would reach the 3.1% letter-writing level in July, peaking at 3.5% in September and remaining above 3% until February 2009. “This was at the top end of economists’ expectations but now looks too low,” Ward says. “A 4% peak now looks plausible if retail energy prices are hiked by a further 20...