Inflation in UK leaps to three per cent in April

Soaring food and fuel bills pushed up the inflation rate by its biggest amount in nearly six years, further denting expectations of interest rate cuts despite a slowing economy.

The Office for National Statistics said consumer prices leapt 0.8 per cent last month from March, pushing the annual rate up by half a percentage point to three per cent. Analysts had expected a rate of only 2.6 per cent.

The pound jumped more than half a cent and interest rate futures tumbled as dealers ratcheted down the probability of further interest rate cuts soon.

"It was a pretty horrific headline number ... and limits the scope for monetary easing from the Bank of England. It will be hard for them to cut in June," said Lee Hardman, currency economist at BTM-UFJ.

Bank of England Governor Mervyn King is now a whisker away from having to write to the government explaining how he plans to bring prices back under control - as required by the central bank's remit if inflation exceeds three per cent. Mr King and his fellow policymakers are in a difficult position. They have an inflation problem as seen in the latest figures and other data showing manufacturers ramped up prices at their sharpest rate in at least 22 years.

But the economy is slowing fast. An influential housing market survey yesterday showed at its weakest level ever as the property market downturn continues to gather pace.

The inflation numbers are also a headache for embattled Prime Minister Gordon Brown as Britons become increasingly fed up with their daily costs becoming ever dearer.

Chancellor Alistair Darling called earlier this week for coordinated international action to bring food prices down as the Labour Party's popularity dives.