Interest rates are now more likely to rise than fall. That is the inescapable conclusion from today's news that inflation has hit 3.3 per cent and the Bank of England Governor's warning that it could soar above four per cent later in the year because of soaring food and oil prices.

Gordon Brown will not have been surprised because the trends have been pointing this way, but it is another serious blow for him as he tries to steer the economy through what are known to be troubled times ahead, and recover his political fortunes.

All Mr Brown's hopes now depend on him being able to convince the electorate that Labour are still the best bet when the economic going gets rough. But with the housing market depressed, it is hard to see how things can improve if rates go up again.

Which explains Mr Brown's frantic activity on the world stage. He needs to get world food and oil prices down and is trying to use what power politicians have in this area - admittedly limited - to be seen to be doing something. This coming weekend he jets off to Jeddah to try to persuade oil producers to help get the price of a barrel down, arguing that the leading economic powers are now committed to meeting more of their energy needs from nuclear and renewable sources.

He wants this week's European summit and next month's G8 summit in Japan to focus on the same areas. It is a world problem but the domestic survival of both Mr Brown and Labour is at stake.

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