Inflation is set to peak this month at around 6.9 per cent, according to economic analysts.

Most analysts predict inflation will rise slightly, from 6.8 per cent in October, but they say this will be the last month of accelerating price rises.

According to Dr Dan McLaughlin, chief economist at ABN Amro and Mr Austin Hughes, chief economist at Irish Intercontinental Bank, the Central Statistics Office (CSO) will today report inflation running at 6.9 per cent or 7 per cent in November.

Mr Jim Power, investment director at Friends First, believes it will remain static at 6.8 per cent.

All agree it will fall back in December as the effects of last December's 50p rise in duty on cigarettes falls out of the index.

According to Mr Hughes, a drop in telephone charges in November will take 0.2 per cent off the index but this will be broadly offset by mortgage rate rises. Continuing strong domestically generated price pressures would also boost the index, he predicted.

The uncertainty is over oil prices, given that the CSO took its price readings on the second Tuesday in November. According to Mr Power, today's figures will show a small rise in food prices, as well as pressure on clothing and footwear. Services will also make a small contribution.

Mr Hughes added that inflation had peaked and price rises would be lower in 2001, particularly given the impact of excise duty and cuts in VAT announced in the Budget.

Next year, there will be competing forces, with a slowing world economy dampening international pressures but domestic pressures continuing to build strongly.

If inflation remains between 4 per cent and 5 per cent, it could lead to higher wage costs, which would be damaging to competitiveness, he warned. "The longer the problem persists, the greater the risks that the landing we suffer in 2002 will be hard rather than soft," Mr Hughes said.