RAPHIC: Inflation -  all under control
However, Mr King repeated his view that the spike in inflation was only temporary, insisting that inflation was “more likely than not” to fall back to the target in the second half.

He said: “Weakness in spending has created a substantial margin of spare capacity within the economy. The committee expects that will bear down on inflationary pressures over time.”

In reply, Mr Darling — in what is likely to be the last such letter before the election — repeated the Government’s pledge to improve the state of public finances in the coming years.

Underlining the effect the VAT rise had on headline inflation, CPIY rate of inflation, which strips out the effect of indirect taxes, fell from 2.8 per cent in December to 1.9 per cent in January.

Retail prices inflation, which includes the cost of mortgages and which is most commonly used in wage negotiations, rose from 2.4 per cent in December to 3.7 per cent in January.