Investing.com - Inflation in Britain rose at its fastest pace in January in 14 months, official data showed on Tuesday, prompting Bank of England Governor Mervyn King to issue a letter of explanation.
Britain's Consumer Price Index rose 3.5% from the previous year, its highest increase since November 2008, the Office for National Statistics said. Economists, however, had expected an increase of 3.6%.
King is required to write to Alistair Darling, the Chancellor of the Exchequer, when the CPI rises above 3% in order to outline out his plans to return to the central bank's inflation goal of 2%.
The United Kingdom's core CPI, which excludes food and energy, rose by 3.1%, falling short of the forecasted 3.2%.
In a statement, the Office for National Statistics said the rise was mainly due to the increase in January 2010 in the standard rate of Value Added Tax to 17.5% from 15%, and to a lesser extent the continued increase in oil prices.
Sterling rose against the euro and U.S. dollar in the wake of the data: GBP/USD hit 1.5686, gaining 0.16% and EUR/GBP reached 0.8703, shedding 0.22%.