Inflation hits 4.5%; Sterling snaps five-day decline

Inflation rose to its highest level since September 2008 last month, reversing the previous month's retreat and breaking sterling's five-day decline against the dollar.

CPI annual inflation was 4.5% in April, up from March's reading of 4% which had indicated a 0.4% fall on February.

The last time CPI annual inflation was higher was September 2008 when it stood at 5.2% - the record high for CPI.

Sterling rose 0.6% against the dollar on the news to $1.63, after five straight days of decline. Against the euro the pound was up 0.45% to €1.15.

The ONS said the largest upward pressures to the change in CPI inflation came from transport, where the timing of Easter contributed to fares rising by 29% between March and April 2011.

However Jeremy Cook, chief Economist At World First, said the jump in the core consumer price measure to its highest level since 1997 discounts transport factors away.

He said: "This solidifies the Bank of England's view in last week's quarterly inflation report, which suggested CPI will likely hit 5% soon and leads us to believe a rate rise in August is now more likely than ever.

"We expect tomorrow's minutes from the Bank of England meeting will show the five members of the MPC who are still sitting on the fence will now start leaning towards hikes."