Pressure is set to mount on the Bank of England tomorrow as inflation is expected to surge.

After jumping to 3.7% in December, analysts expect tomorrow’s inflation figures to show a rate of 4.1% for January, as the VAT hike from 17.5% to 20% on January 4 and soaring commodity costs pushed up the cost of living.

Last month’s unexpectedly large increase in inflation sparked calls for a interest rate hike, and just as the more hawkish MPC members were looking close to getting their way, figures revealed the economy went into shock decline in the final three months of 2010 by 0.5%.

The figures highlighted the fragile position the economy has found itself in – teetering close to a period of so-called stagflation, when sluggish growth and high unemployment combine with soaring prices.

Possibly considering the weaker than expected fourth quarter GDP figures, the MPC held its nerve and kept rates at their 0.5% historic low last week for a 23rd consecutive month.

But the Bank believes inflation has been driven higher by temporary price shocks – such as the weak pound and high energy costs, which should pull back.

Howard Archer, chief UK and European economist at IHS Global Insight, said while he expects inflation to continue to rise in the short term, it will drop back to 2% in early 2012.

He said: “Consumer price inflation will hopefully start heading down in the second half of the year and dip below 3% before the end of 2011 as the upward impact from VAT developments, higher energy, commodity and food prices, and sterling’s past sharp depreciation wanes.”

Later in the week, the City will be looking closely at the Bank’s latest inflation report and the MPC believes inflation will return to the 2% target or when tightening of monetary policy is a likely event.