Inflation is even worse than you think – and it’s bad news for mortgages

As core inflation hits a 30-year-high, a painful 0.5 per cent rise in interest rates is now on the cards, says James Moore

The Bank of England has cause for concern as inflation topped expectations again (AP)

If inflation is an economic illness, the cure of high interest rates isn’t working as it should.

Falling energy bills, and the first optimistic noises on food from supermarkets including Tesco, suggested there ought to be a fall, however small, in the Consumer Prices Index. Economists polled by Reuters predicted it would come in at 8.4 per cent for May.

In the end, the official number – unchanged, at 8.7 per cent – provided another crushing disappointment.