Britain's inflation rate jumped to 2.5% in June - its highest level in nine months - propelled higher by a record increase in utility bills, official data showed today.
While the figures may boost expectations that the Bank of England will have to raise interest rates from 4.5 percent sooner or later, policymakers are aware that higher household bills are cutting disposable income and could restrain consume spending.
Inflation could pick up further above the BoE's 2.0 per cent target in coming months given continued rises in energy prices and lagged effects from household bill rises announced earlier in the year.
The BoE has left interest rates unchanged now since August. Most analysts expect the next move to be a hike, but several have recently abandoned calls for higher rates as soon as next month as policymakers have signalled no hurry to move them.
Tensions in the Middle East have pushed up oil prices this month to record highs again and there is increased uncertainty about future energy supply.
British consumers are already faced with much higher fixed monthly costs and the latest rise in world oil prices could push petrol prices up again.