The minutes of the latest meeting of the Bank of England's Monetary Policy Committee on 7 and 8 April reveal growing concerns within the Bank's most senior policymaking body of resurgent inflation.
The document states that some MPC members said: "There were also some upside risks to inflation. Oil and some other commodity prices had risen substantially over the past two months, raising the near-term outlook for inflation.
"And, although measures of households' medium-term inflation expectations had remained reasonably stable, some measures of financial market participants' inflation expectations had been drifting up.
"Given that a period of above-target inflation was in prospect at a time when monetary policy was exceptionally accommodative, this was a source of concern to some members."
The minutes come a day after worse-than-expected inflation figures, with the CPI up 3.4 per cent on the year to March and the RPI up to 4.4 per cent. The weak pound, soaring commodity and food prices and the hike in VAT are blamed. There is also concern that core inflation is showing disturbing strength.
Yesterday's data on the labour market showed a quickening in pay settlements, after a long period of restraint. Many economists are predicting that the RPI will breach 5 per cent when the figures for April are published in four weeks' time.
The RPI is used for pay negotiations and many in the Bank may be concerned that higher inflationary expectations may soon feed into the economy, meaning that the current ultra-low interest rate regime will have to be ended sooner than might have been desirable, given the overall weakness of the economy.
The MPC voted unanimously to leave the Bank rate at 0.5 per cent and quantitative easing on hold.Reuse content