Inflation now 3.8%: Rising food and fuel costs blamed

Inflation in the UK has now risen to 3.8% for June, this is now at an 11-year high. The increase in inflation is being blamed on rising food and fuel costs; however the reason that food has gone up is because of the price of fuel.

This increase means that inflation is well above the 2% target from the government, this news will reduce the likely hood of any rate cut in the UK.

In a recent meeting The Bank of England forecast that inflation could rise to 4% this year, it seems like their predictions are coming true. The Bank of England has the tough job of trying to balance the need to control inflation with worries over growth.

According to BBC News, both Food and non-alcoholic drinks were one of the major factors why inflation has increased, prices of these items have increased by 2.1% in June.

Surging oil prices have driven up the cost of fuel, the average price for a litre if fuel in June has increased by 5.3p.

It was not all bad news though, the price that we pay for clothing and shoes fell in June, a result from retailers reducing prices to try and attract more customers.

With the news that inflation has grown quicker than the Bank of England forecast, Governor Mervyn King, now has less breathing space to reduce the base rate.