RISING fuel and food prices are the underlying cause of higher interest rates, according to a Bank of England rate-setting expert.

Charlie Bean, the Bank’s chief economist was one of the nine members of the Monetary Policy Committee who voted for the recent quarter per cent hike to 5.5 per cent.

The decision followed a sharp rise in inflation to 3.1 per cent, forcing the Governor Mervyn King to write a letter of explanation to Gordon Brown, Chancellor of the Exchequer.

Commentators are united in their view that interest rates will rise a further quarter per cent in June, with some even predicting a half per cent rise.

Mr Bean declined to speculate about another rate increase. "I haven’t ruled it out and I haven’t ruled it in," he said during a visit to Chatham Historic Dockyard.

Increases in the cost of oil, domestic gas and electricity had fuelled recent increases, Mr Bean said. "They feed in pretty directly to consumer prices. A significant chunk of the increase was down to that. Global food prices have risen which reflect the global weather conditions such as drought in Australia.". A recent report suggests that retail food prices could be heading for their biggest annual increase in 30 years.

Mr Bean spent two days in Kent and Medway sounding out local business people on the economic situation facing them on the ground.

Although interest rates were not high by historical standards, he said, it was necessary for the MPC to put "a foot on the brake."

Mr Bean expected inflation to fall quite sharply for the rest of the year and come back "close to target."

"We will set interest rates at whatever level we think appropriate to achieve the target in the medium term. Everything will depend on how the data unfold over time."

According to minutes of the May meeting, the MPC debated a half per cent rise. "But all nine of us on the committee decided that 25 basis points was the right move," he said.

People should avoid concluding that just because there was talk of it in May, another increase in June was inevitable.

"There does seem to be somewhat more underlying inflationary pressure than we had expected which is why we’ve been raising interest rates a bit."

As for house prices, he was surprised by the continued buoyancy of the market. "We didn’t expect it to be quite as strong as it has been."