Unit 2: Why is UK inflation so high?

A fascinating clip from the BBC Daily politics programme about why UK infaltion is comparatively high and whether interst rates should rise

http://www.bbc.co.uk/news/uk-politics-12217592

and Ch4

http://www.channel4.com/news/inflation-rises-to-3-7

a) Why is the UK inflation rate so high?
b) What sort of inflation is the UK therfore experiecing?
c) Draw an AS/AD diagram to show how this inflation occurs
d) Comment on the extent to which increasing interest rates would decrease the UK inflation rate