Inflation 'Will Hit 4.6%'

Britons expect recent price rises in food and fuel to continue over months to come, a new poll shows.

Research firm YouGov, along with the Citigroup bank, released the findings today - which quizzed people over their expected rate of inflation for the next year. It found an average prediction of 4.6 per cent, well up on May's 4.1 per cent.

The latest CPI rate - the government's preferred inflation benchmark - stood at 3.3 per cent for May. This is a full 1.3 per cent above the Bank of England's own price rise target, and was driven up by the rapidly rising costs of wholesale energy.

In particular, crude oil has been subject to some eye-catching cost increases over recent months, due to a combination of speculation, supply shortages and increasing demand from developing economies. The commodity currently costs over $140 per barrel: near the all-time high.

"Some may argue that the erosion of the credibility of the [Bank's] inflation target does not matter as long as pay growth does not pick up," Citigroup's Michael Saunders commented. "In our view, that is too complacent."