UK inflation rate rises unexpectedly to 3.1 per cent

LONDON – Bank of England Governor Mark Carney will have to write a letter to Britain’s Treasury chief explaining why inflation in the country is running by more than a percentage point above target.

Official figures Tuesday show that the annual inflation rate in Britain rose to 3.1 per cent. The increase was unexpected — most economists predicted a modest decline to 2.9 per cent from the previous month’s 3 per cent.

Because inflation is more than a percentage point above the bank’s 2 per cent target, Carney has to explain to Chancellor of the Exchequer Philip Hammond what he and his colleagues are doing about getting inflation down.

In November, pre-empting the increase, the bank raised its main interest rate by a quarter-point to 0.5 per cent, its first increase in a decade.