The rate of inflation is expected to have risen above 3% when the figures for May are released by the Bank of England later today. This would force the Bank's Governor to write to the Chancellor explaining why the rate is above the target of 2%

The figure of 2% like many other targets of this Government is a figure plucked out of the deep blue sky. It is preposterous to think that if inflation in the rest of the world increases that somehow the United Kingdom will not be affected because the former Chancellor in his great wisdom has decreed that it should not rise above 2%. The consequential act of the Governor writing to the Chancellor is as meaningless as the subjects of King Canute explaining why the tide did not obey His Majesty's instruction.

What is required, and I have argued this since the figure of 2% was first introduced, is that the target should be the average inflation rate of a basket of similar currencies. It is madness to introduce measures to maintain a 2% rate when the rest of the world is inflating at a much greater level.