Milk prices up 38% and sugar 42% amid fear of new rate rise

We're still on track, says Hunt despite surge in food prices

- Nicholas Cecil, Jonathan Prynn, Simon Hunt

FOOD prices have sky-rocketed by a shocking 19 per cent, official figures revealed today as warnings grew that more mortgage bill increases will further deepen the cost-of-living crisis.

Sugar was up 42 per cent, milk 38 per cent, olive oil 49 per cent, cheese 34 per cent and eggs 32 per cent in March, compared with a year earlier, fuelling the sharpest jump in food prices since August 1977.

Overall inflation stayed stuck in double figures, dashing hopes of an early end to the crisis.

The consumer prices index stood at 10.1 per cent last month — down from 10.4 per cent in February — the seventh month on the trot it has been in double digits, and defying City expectations that it would dip into single figures.

Economists swiftly warned that the Bank of England’s Monetary Policy Committee could be forced to hike interest rates from 4.25 percent to 4.5 per cent in May, and possibly even higher later this year, to ensure inflation is being brought properly under control.

These increases will feed through into higher mortgage bills for millions of homeowners, and also drive up rents.

Inflation is still expected to fall sharply in the summer after energy costs dropped compared with their stratospheric peaks.