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The admission came as the Consumer Price Index increased to 3.3 per cent, well above the target level of 2 per cent.

Mervyn King, the governor of the Bank of England, said in a letter to Alistair Darling MP, Chancellor of the Exchequer, that the increase had been due to hikes in both energy and food prices.

Mr King said: "As things stand, inflation is likely to rise sharply in the second half of the year, to above 4 per cent."

He said any such projection would be particularly sensitive to further changes in domestic gas and electricity prices.

This was only the second time inflation had exceeded the target level since the Bank was granted independence to set interest rates in 1997.

The news came as minutes from the Banks' Monetary Policy Committee revealed that some members considered raising rates to curb inflation at its June meeting.

However the committee eventually voted eight to one in favour of keeping interest rates at 5 per cent.

David Blanchflower, the leading dove of the MPC members, again voted to reduce rates to 4.75 per cent.