Analysts polled by Reuters predicted the CPI (NYSE: CPY) rate would hit 3.6 percent when the figures are published at 9:30 a.m. on Tuesday, up from 3.3 percent in May and the highest since the Bank took control of interest rates more than a decade ago.
"UK inflation had been a growing nightmare and we expect no respite in June," said David Page, economist at Investec (LSE: INVP.L) . "This month we expect additional pressure from the energy sector.
Petrol prices have shot up again as the cost of crude oil hit new records. Figures out on Monday showed oil prices in June rose at their sharpest annual rate since June 2000 -- 86.4 percent.
Inflation could soon top 4 percent as food and fuel prices are rising right across the world.
But policymakers are also worried by slowing growth as house prices are sliding and hitting consumer confidence and property-related sectors hard.
Bank Governor Mervyn King said on Monday that there was little policymakers could do to bring down the current rate of inflation which was being pushed higher by rising commodity prices.
To do so, he said, would require large interest rate rises that could have a severe impact on the economy.
King said the dilemma facing policymakers was that they needed to balance the risk of higher inflation now becoming entrenched in people's mind and clear downside risks to growth pushing inflation below the target in the medium-term.
Source:http://uk.biz.yahoo.com/15072008/325/inflation-climbing-higher-june.html
