Inflation rises to record levels

Dearer furniture and petrol prices have pushed inflation higher. In March the Retail Prices Index rose by 4.8% - up from 4.6% the previous month. It is at its highest level since July 1991.

Meanwhile, inflation under the Consumer Prices Index (CPI), which excludes housing costs and is the government's preferred measure, rose to a record 3.1% in March - up from 2.8% in February. The increase is expected to trigger a further rise in interest rates.

As the rise was more than one percentage point above the government's inflation target of 2% the governor of the Bank of England, Mervyn King, was forced to write a letter of explanation to chancellor Gordon Brown. It is the first time that such a letter has been written since Labour handed over control of monetary policy after its election in 1997.

King said that "higher petrol prices contributed significantly to the pick up of inflation in March".

There was also a record rise of 10% in the prices of furniture and furnishings as retailers put up prices "in the lead up to Easter special offers".

However, King was optimistic that with the substantial increases in household gas and electricity prices dropping out of the annual comparison, inflation was "likely to fall back within a matter of months".