Inflation hits 11-year high

Inflation hit a record high of 4.4 per cent in July, more than double the Bank of England's two per cent target and the highest level since 1997. The Consumer Price Index (CPI) jumped from a previous high of 3.8 per cent in June. The surge, which was in line with the expectations of City economists, is due to the rocketing prices of food and fuel.

Last week the Bank of England's Monetary Policy Committee (MPC), who had access to the July's inflation figures, decided to hold interest rates at five per cent. While inflation remains a threat, MPC members are seemingly aware of the growing threat of recession. Analysts are now waiting for the publication of the Bank's quarterly inflation report tomorrow, which will reveal the MPC's latest forecasts for inflation and economic growth.