May 14 (Bloomberg) -- U.K. inflation may have exceeded the Bank of England's 2 percent target for a 12th month in April, a sign higher interest rates have yet to cool the economy, a survey of economists shows.

Consumer prices probably rose 2.8 percent from a year earlier after increasing 3.1 percent in March, the most since 1997, according to the median forecast of 39 economists surveyed by Bloomberg News. The Office for National Statistics will release the report at 9:30 a.m. tomorrow in London, a day before the Bank of England publishes quarterly economic forecasts.

The March increase forced the bank's governor, Mervyn King, to write to the government with the assurance that policy makers are determined to get inflation under control. The bank raised its benchmark interest rate to a six-year high on May 10, saying the risks to consumer prices remain ``tilted to the upside,'' and investors expect another boost by September.

``The U.K. may struggle to get inflation back to 2 percent,'' said Peter Dixon, an economist at Commerzbank AG in London. ``I wouldn't be surprised if rates have to go up again.''

Investors are betting the bank will increase the key rate from the current 5.5 percent for a fifth time since August. The implied rate on the September interest-rate futures contract was 5.93 percent at 9:52 a.m. in London today. The contract settles to the three-month London inter-bank offered rate for the pound, which averaged about 15 basis points more than the central bank's rate for the past decade.

Energy, Food

Record increases in energy costs in 2006 stoked inflation in the past year, and the price of food and furniture contributed to the jump in March. While energy companies have announced plans to lower bills, prices elsewhere may remain high, keeping the consumer price index above 2 percent longer than the bank forecasts.

Milk prices worldwide are rising at the fastest rate ever. Skim-milk powder, the benchmark for world trade, has risen 60 percent in six months to a record $1.58 a pound May 4 on the Chicago Mercantile Exchange.

``Food prices have been at extremely elevated levels in recent months, and it looks like companies have been able to pass along higher energy prices to consumers,'' said Nick Kounis, an economist at Fortis Bank in Amsterdam who formerly worked at the U.K. Treasury.

The March inflation rate, more than a percentage point above target, required King to publicly account for the deviation in a letter to the Treasury on April 17. That was the first time since the government granted the bank authority to set rates in 1997 that the target was missed by so wide a margin.

Factory-Gate Prices

Policy makers are concerned by signs companies are able to push through price increases, adding to risks that inflation will stay above 2 percent, according to a statement published by the bank along with its May 10 decision.

Prices for goods at factories rose for a fifth month in April, by 0.5 percent, the government said today. That's in line with the median of 27 economists in a Bloomberg News survey.

Wage increases may also pick up as unemployment falls. Data due May 16 may show wages including bonuses rose 4.8 percent in the quarter through March, according to the median of 31 economists in a Bloomberg survey. The number of people claiming jobless benefits probably fell in April for a seventh month, according to the median of 32 estimates.

Record Debt

Still, there are signs that higher interest rates are starting to cool the economy. Mortgage approvals fell to 113,000 in March, the lowest in 11 months, suggesting the housing market may slow later this year. Personal insolvencies reached a record last quarter as some consumers struggled to pay off a record debt burden of 1.3 trillion pounds ($2.6 trillion).

The central bank said May 10 that inflation ``is likely'' to slow to the 2 percent target ``in the course of the year.'' The bank will release quarterly forecasts on May 16, which may indicate whether further interest-rate increases are needed to cool the economy.

In February, the bank forecast that the inflation rate will fall to an average of 1.9 percent in the fourth quarter. Economic growth will exceed 3 percent this year, the fastest pace since 2004, the bank said. The forecasts factored in investors' expectations of a quarter-point increase to a 5.5 percent benchmark rate.

``We are at the tipping point of another rate increase,'' said Matthew Sharratt, an economist at Bank of America Corp. in London. ``Risks are still on the upside. The possibility of a Bank of England forecast implying rates will go up is not remote.''

To contact the reporter on this story: Jennifer Ryan in London at Jryan13@bloomberg.net.

Last Updated: May 14, 2007 05:04 EDT