Inflation rises above 2% in October

Updated 06.53 Wed Nov 14 2007

Keywords: air fares, petrol, Inflation

Inflation rose above 2 per cent in October making it the largest month-on-month jump since March, official figures have shown.

The impact of soaring petrol prices, an increase in air fares and a surge in the cost of food took the rate of inflation to 2.1 per cent - higher than the 1.9 per cent expected by economists and back above the Bank's benchmark for the first time since June.

The petrol and food costs have cancelled out the deflationary effect of lower gas and electricity bills

Petrol prices rose by an average 2.7p a litre to 94p in October due to an increase in Government fuel duties, while supermarkets charged more for staples such as meat and fruit.

The petrol and food costs have cancelled out the deflationary effect of lower gas and electricity bills, which most experts had expected to keep inflation below the 2 per cent target last month.

The 0.3 per cent increase since September will also dash borrowers' hopes for an interest rate cut this year.