London, May 20 (Bloomberg) -- U.K. inflation probably accelerated in April as the lowest interest rates in 38 years led consumers to spend more, enabling retailers to raise prices, economists said. The annual gain in retail prices excluding mortgage interest, the government's preferred measure of inflation, probably rose to 2.4 percent from 2.3 percent in March, according to the median forecast of 25 economists surveyed by Bloomberg News. ``Consumers are more confident in all of our branches, and this has resulted in higher-ticket sales,'' said John Angell, the managing director of John Angell Jewellers Ltd. in Dover, England. ``Confidence is being fed by very low interest rates.'' Europe's second-biggest economy is beginning to recover from stagnation in the last six months. Policy makers at the Bank of England are considering when to reverse last year's seven interest rate reductions to keep a lid on inflation. Inflation has remained below the bank's 2.5 percent target every month but two since March 1999. The National Statistics office will report April's figures tomorrow at 9:30 a.m. London time. ``The bank can afford to wait before raising rates because inflation is below target,'' said James Shugg, an economist at Westpac Banking Corp. ``The risk is they will have to move rates soon.''

Rate Rises
In Britain, the central bank probably will lift its benchmark lending rate by August, driving it up a half point to 4.5 percent by the end of this year, according to a separate survey of 35 economists. Futures markets suggest a move by mid-year is possible. Yields on the three-month Libor contract maturing in June rose to 4.29 percent this morning from 4.21 percent a week ago. Supermarkets including Tesco Plc and J. Sainsbury Plc are benefiting from selling more expensive ready-to-eat meals. Jewellery stores such as Angell and Signet Group Plc say customers are buying more expensive items. To date, the central bank has welcomed strength in consumer spending, which fuels two-thirds of the economy and helped Britain weather the worst slump in manufacturing production since 1991 last year. Now that growth is rebounding, the Bank of England ``stands ready to counter building inflationary pressures'' Deputy Governor Mervyn King said last week. Other central banks also are concerned about inflation. Policy makers in Canada, Sweden, Mexico and New Zealand already have raised rates after a round of reductions designed to cushion the blow of recessions in the U.S., Germany and Japan last year.

Inflation Abroad
In the 12 nations sharing the euro, inflation has remained above the European Central Bank's 2 percent ceiling since June 2000, putting pressure on policy makers to raise rates for the first time in 20 months. The ECB kept its benchmark lending rate at 3.25 percent this month after four reductions last year. The U.S. economy expanded at an annual rate of 5.8 percent in the first quarter, the quickest in two years, speeding up the pace of inflation to 0.5 percent in April from 0.3 percent the month before. Economists expect the U.S. Federal Reserve to lift rates in August. In the U.K., higher oil prices and taxes pushed up prices paid by consumers. Brent crude futures, a benchmark blend, rose 6 percent last month from March to an average $25.79 a barrel. Prime Minister Tony Blair's Labour government boosted taxes paid to local governments and also said it would raise 22 billion pounds ($32 billion) in revenue during the three years from next April. Last week, the Bank of England predicted a 68 percent chance inflation will exceed its target within two years. ``The bank has all the information it needs to justify a rate rise,'' said John Butler, an economist at HSBC Bank Plc. ``But they're going to react gradually and only once they're sure of a recovery.''