Inflation 'could hit 5% in months'

The Bank of England has warned that inflation is in danger of topping 5% in the coming months, exerting more pressure on policymakers to raise interest rates.

According to minutes of the March meeting of the Bank's Monetary Policy Committee, six members voted in favour of maintaining interest rates at 0.5%, while three voted for a rate hike.

TheBank of England said the recent rise in oil prices, driven by political tensions in North Africa and the Middle East, is exerting pressure on inflation and growth.

February saw the Consumer Price Index rise to 4.4%.

Rate-setters fear the shock decline in the UK economy seen at the end of 2010 may not have been temporary, with consumers continuing to be worried about their financial situation and reducing spending.

Inflation has risen to well above the Bank's 2% target, mainly driven by soaring food and oil prices.

Political tensions in Libya have led to an increase in oil prices, with Brent crude in London currently at 115 US dollars a barrel, while crude oil for May delivery is at 105 US dollars a barrel on the New York Mercantile Exchange.

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