Inflation hits eight-year high

The prospect of further cuts in interest rates receded sharply yesterday after government figures showed soaring oil prices and less generous summer sales pushing inflation to its highest level since Labour came to power.

With petrol prices at record levels and signs of a pick-up in underlying price pressure, the City said it was looking highly unlikely that the Bank of England would repeat this month’s quarter-point cut in the cost of borrowing in the near future.

The spiralling cost of crude oil has added to price pressures since the July inflation data was collected a month ago. According to the ONS, the cost of a litre of unleaded petrol rose by 2.8p to 87.5p last month but has since increased by a further 2.7p to 90.2p. Petrol prices contributed 0.13 of the 0.3 percentage point rise in CPI inflation last month, with dearer air and sea travel also pushing up the cost of living.

The Guardian