Prime Minister David Cameron has today said the Bank of England needs to set interest rates in order to control inflation.
UK inflation rose to 3.7% in April – the highest level in 17 months and far exceeding the 2% target.
The rise was boosted by food, fuel and clothing price gains. Annual food inflation reached 2.6% last month, as prices for meat, fruit and vegetables rose compared with falling costs this time last year.
Meanwhile, fuel costs have increased by more than 25% in the last year. Average petrol prices hit 120.2p a litre in April – the highest since records began in 1996.
The Consumer Price Index inflation rate is a benchmark for the Bank of England’s interest-rate setting Committee but the Bank’s Governor, Mervyn King, has previously dismissed fears that soaring inflation would demand a significant rise in interest rates in the months ahead.
However, speaking on GMTV today, Mr Cameron said: “We have seen a slightly worrying increase in inflation in recent months so interest rates will be set to control inflation.”
Earlier this week, think tank, the OECD, recommended that the UK raise interest rates “no later than the last quarter of 2010” in order to bring down inflation.
The Prime Minister’s comments come just a few days after Ben Bernanke, the chairman of the US Federal Reserve, emphasised the importance of central banks to be free of political meddling and to keep their independence.
Mr Bernanke believes central banks throughout the world should be able to make key economic decisions about monetary policy without Government interference.