"While disappointing, today's figures were not as appalling as some have feared, following last week's surprising rise in Bank Rate to 5.25%. The Governor will not have to write a letter to the Chancellor this month explaining the overshoot in inflation.
"The bulk of the acceleration in inflation over the past year has been due to the surge in energy prices, which have squeezed disposable incomes and would dampen consumer spending on other items. CPI inflation excluding energy prices was only 2.1%. Core CPI inflation (which excludes energy, food, alcoholic beverages & tobacco) was only 1.8%.
David Kern concluded: "We reiterate that the critical test remains the trend in labour costs. We continue to believe that, unless there is firm evidence of stronger wage pressures, the MPC should refrain from further interest rate increases. Oil prices have fallen sharply in recent months, and the MPC's own comments suggest that they expect inflation to fall later in the year. After last week's shock, it is important to restore stability, and to avoid damaging unnecessarily business confidence."