Grainne Gilmore Inflation surged above forecasts to 4.7 per cent in August to the highest rate since Britain's last recession, after the price of food and energy rose.
Today's figures forced Mervyn King, Governor of the Bank of England, to write his third letter in 18 months to Chancellor Alistair Darling to explain why inflation remains so far above the Government's 2 per cent target.
He is required to write such a letter when inflation rises by 1 percentage point above the target and every three months thereafter until it falls below the 3 per cent threshold.
In his letter, Mr King said he expected inflation to remain above target well into 2009, and said he expected to write more letters to the Chancellor.
Analysts had forecast the CPI measure of inflation would rise from 4.4 per cent to 4.6 per cent. Inflation is now at the highest level since April 1992 when Britain was in the grip of a full-blown slowdown.
Inflation was pushed higher by spiralling energy bills, according to the Office for National Statistics (ONS). Households are now paying 27.7 per cent more on their gas bills and 18 per cent more for electricity.
The price of food and non-alcoholic drinks also rose by 1.3 per cent last month and, in the year to August, by 13 per cent.
However, the ONS said this rise was partly offset by the falling cost of petrol and diesel, which fell by 4.6 per cent during the month.
The cost of banking services also increased as lenders cut their mortgage arrangement fees by less than they did last year.
These fees have grown sharply over the past five years, with arrangement fees of more than £1,000 becoming commonplace. Personal care items, such as hair dryers, also rose in cost, helping to push inflation higher.
Today's gloomy figures dented hopes of an imminent rate cut as the Bank of England is unlikely to adjust rates until it sees evidence that inflation is falling.
The Bank will be particularly concerned by the rise in core inflation, which excludes volatile energy and food prices and could indicate that higher energy and fuel costs are being passed on by producers and becoming embedded in the economy.
Core inflation rose to 2 per cent, from 1.9 per cent in July, equalling the highest rate in 10 years.
Howard Archer, chief UK and European economist at Global Insight, said: "The continuing upward trend maintains concern that higher energy and food prices are having second-round inflationary effects."
However, the RPI measure of inflation, which includes housing costs, fell slightly from 5 per cent in July to 4.8 per cent in August.
Inflation surged above forecasts to 4.7 per cent in August to the highest rate since Britain's last recession, after the price of food and energy rose.
Today's figures forced Mervyn King, Governor of the Bank of England, to write his third letter in 18 months to Chancellor Alistair Darling to explain why inflation remains so far above the Government's 2 per cent target.
He is required to write such a letter when inflation rises by 1 percentage point above the target and every three months thereafter until it falls below the 3 per cent threshold.
In his letter, Mr King said he expected inflation to remain above target well into 2009, and said he expected to write more letters to the Chancellor.
Analysts had forecast the CPI measure of inflation would rise from 4.4 per cent to 4.6 per cent. Inflation is now at the highest level since April 1992 when Britain was in the grip of a full-blown slowdown.
Inflation was pushed higher by spiralling energy bills, according to the Office for National Statistics (ONS). Households are now paying 27.7 per cent more on their gas bills and 18 per cent more for electricity.
The price of food and non-alcoholic drinks also rose by 1.3 per cent last month and, in the year to August, by 13 per cent.
However, the ONS said this rise was partly offset by the falling cost of petrol and diesel, which fell by 4.6 per cent during the month.
The cost of banking services also increased as lenders cut their mortgage arrangement fees by less than they did last year.
These fees have grown sharply over the past five years, with arrangement fees of more than £1,000 becoming commonplace. Personal care items, such as hair dryers, also rose in cost, helping to push inflation higher.
Today's gloomy figures dented hopes of an imminent rate cut as the Bank of England is unlikely to adjust rates until it sees evidence that inflation is falling.
The Bank will be particularly concerned by the rise in core inflation, which excludes volatile energy and food prices and could indicate that higher energy and fuel costs are being passed on by producers and becoming embedded in the economy.
Core inflation rose to 2 per cent, from 1.9 per cent in July, equalling the highest rate in 10 years.
Howard Archer, chief UK and European economist at Global Insight, said: "The continuing upward trend maintains concern that higher energy and food prices are having second-round inflationary effects."
However, the RPI measure of inflation, which includes housing costs, fell slightly from 5 per cent in July to 4.8 per cent in August.
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