The Bank of England can do almost nothing keep a lid on the scourge of inflation in the current economic climate and it will likely remain above 3% until well into 2009, the central bank's Governor Mervyn King warned yesterday in his annual report to parliament.

The Bank of England can do almost nothing keep a lid on the scourge of inflation in the current economic climate and it will likely remain above 3% until well into 2009, the central bank's Governor Mervyn King warned yesterday in his annual report to parliament.

While the role of the BoE's Monetary Policy Committee is to keep inflation in check at 2%, the consumer price index in May climbed to 3.3% - its highest rate in more than a decade - and analysts are expecting a rise to 3.6% when June's figures are published today.

Central bank's policymakers are caught between the devil and the deep blue sea, with the rising cost of oil and food bleeding into the wider, weakening economy.

Commodity-fuelled price rises cannot be curbed with interest-rate adjustments at a time when the economy is slowing.

King yesterday warned: "The Monetary Policy Committee can have little impact on the path of inflation in the short term.

"It has not attempted to prevent inflation moving away from the target following the sharp rises in commodity prices.

"To do so would have required a large increase in interest rates with such a severe impact on output and employment that it would have risked inflation falling well below the target further out."

He added: "It is likely that inflation will remain above 3% until well into next year."

King said the policymakers faced a dilemma in that they must balance the risk of a higher level of inflation becoming entrenched in the public consciousness against the danger that slower economic growth will push inflation below the target in the medium term.

The MPC voted to keep rates on hold earlier this month at 5% - although most economists expect it to cut rates eventually as the economy continues to drag.