Business and economics |

The rate of inflation, as measured by the consumer prices index (CPI), rose by a massive half a percentage point from 2.5% to 3% following surging gas and electricity bills, food prices, and Budget tax hikes on alcohol and tobacco.

The figure is well over the 2.6% expected by City economists and any further increase will mean that the Bank of England Governor Mervyn King must write an open letter to the Chancellor to explain the failure to control inflation.

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