INTEREST RATE RISE EXPECTED AFTER UK INFLATION SHOCK

Interest rates are expected to rise again after UK inflation remained stuck at a much higher level than expected for the fourth month in a row.

Inflation was 8.7% in May, the same as in April.

The shock figure was driven by higher prices for flights and second-hand cars but supermarket food prices also continued to rise rapidly.

Interest rates are widely expected to rise by 0.25% to 4.75% on Thursday but some suggest they could now rise to 5%.

Karen Ward, a member of chancellor Jeremy Hunt’s economic advisory council, said the Bank had “been too hesitant” in its interest rate rises so far and called on it to “create a recession” to curb soaring prices.

Mr Hunt appeared to back further interest rate rises saying his office would not “hesitate in its resolve to support the Bank of England as it seeks to squeeze inflation out of the country’s economy.”