UK inflation unexpectedly surges to 17-month high in April

 Britain's inflation rate jumped more than expected in April to hit a 17-month high, driven by big rises in tax on alcohol and tobacco, as well as women's clothing and food prices, official data showed on Tuesday.

The Office for National Statistics said consumer prices rose by an annual 3.7 percent last month compared to 3.4 percent in March, above economists' expectations of an increase to 3.5 percent.

The Bank of England will now have to write to new Conservative finance minister George Osborne explaining why inflation is still more than 1 percentage point above the government's 2 percent target, as inflation has not eased significantly in the three months since the BoE last wrote.

Nonetheless, most economists and the central bank expect higher inflation to be transitory, as one-off effects are gradually outweighed by weak growth and high unemployment, which limit the ability of firms and workers to raise prices and wages.

Britain's annual Budget fell a month earlier in 2010 than in 2009, bringing forward annual rises in tax on alcohol and tobacco, which accounted for a third of the increase in the annual rate of CPI between March and April.

Higher prices for food and for clothing and footwear both also contributed a similar amount to the increase in the CPI rate from March to April.

On the month, consumer price inflation rose by 0.6 percent.

The retail price inflation gauge rose to 5.3 percent from 4.4 percent, versus forecasts for a rise to 4.9 percent, the highest since July 1991. That was largely driven by base effects after the sharp fall in mortgage interest rates in 2009 was not repeated in 2010.

RPI includes more housing costs than CPI, which matches the European Union Harmonised Index of Consumer Prices (HICP), and is used to index many social security payments and some wages.