The Bank of England's headache over inflation is now likely to have turned into a full-blown migraine. The Bank's Monetary Policy Committee's (MPC) only mandate is to keep inflation close to the 2 per cent target in the medium term, which it interprets as in about two years' time.

But, here and now, inflation is spiralling at its own merry pace, regardless of recent dips in the cost of oil. The Bank warned us that inflation would rise, but maintained that this would be a "one-off" adjustment as the increased price of oil was factored into prices. But there are signs that the increase in the price of oil has fed through to other areas of the economy, not just the garage forecourt.

Core inflation, which excludes volatile energy and food prices, spiked to 1.9 per cent in July from 1.6 per cent in June, which raises concerns that higher energy and food prices are increasingly being passed through to other parts of the economy, forcing up prices again.

This process is called a "second-round effect" and is something that the Bank is desperate to avoid, as once prices that are not directly related to higher oil costs rise, there is a danger that wages could surge as employees demand bigger pay packets to cover the increased cost of living. This would start a vicious circle of price rises — or a wage-price spiral.

The Bank may be concerned with the rate of inflation in two years, but it has to send a strong message that it is determined to stop any "second-round effects" now. One way to do this would be to raise interest rates.

But no central bank likes making a move that is almost certain to drive the country into recession. Someone shouold take a bumper pack of painkillers round to the MPC, pronto.

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