Bank of England Governor Mervyn King
Annual inflation hit a 2-1/2 year high last month and core prices rose at a record pace, deepening the policy dilemma for the Bank of England as it keeps interest rates low to support a sluggish economy.
Consumer prices rose a bigger-than-expected 4.5 per cent year-over-year, the fastest pace on increase since October 2008, propelled by soaring travel costs around Easter and higher duty on alcohol and tobacco.
Prices also rose 1.0 per cent month-on-month, a rise of a magnitude seen only once before, the Office for National Statistics data showed.
Analysts had expected the annual rate to tick up to 4.2 per cent after a surprise dip to 4.0 in March.
Particularly worrying was a jump in "core" inflation, which strips out volatile items such as food and fuel. This rose to 3.7 per cent, the highest annual rate on record.
Sterling jumped and gilt futures extended losses after the figures fuelled speculation that the central bank would raise interest rates from a record low of 0.5 per cent by the year-end.
But consumer price inflation has been above the Bank's 2 per cent target since December 2009, and the central bank warned in its inflation report last week that it may rise to 5 per cent this year.
Analysts also said the figures fitted that narrative.
"There's no need to panic - especially given that evidence of second-round effects of the recent high rates of inflation on wage growth remains conspicuous by its absence," said Vicky Redwood of Capital Economics.
"Indeed, although inflation will rise further over the coming months as past rises in energy and agricultural prices feed through, we still expect it to fall sharply next year.
Every three months that inflation is more than one percentage point away from its target, Bank Governor Mervyn King is required to write an open letter to the government explaining why inflation has deviated and what action is being taken to remedy it.
The letter from Bank's Mr. King and the reply from Chancellor George Osborne will be published today.
The statistics office blamed the unusually late timing of Easter this year for the jump in travel costs which added 0.36 percentage points to the change in the annual rate between March and April. It noted that in previous years, some of that was reversed in the following month.
The retail price inflation gauge, which includes more housing costs and is the benchmark for many wage deals, eased slightly to 5.2 per cent, as expected.
The Bank of England, which says most of the factors pushing up prices are only temporary, faces a tricky balancing act of taming inflation over the medium term without damaging a fragile recovery at a time of public spending cuts, tax rises and economic uncertainty.