Another interest rate rise to 5.5% is just weeks away

New figures show inflation has soared to 4.6 per cent, the highest level for 16 years.

Experts warned the Bank of England will be forced to raise interest rates in a desperate attempt to slow down inflation.

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Economists said they expect interest rates, which are already at a five-year high of

5.25 per cent, to rise to 5.5 per cent in April or May.

The timing of the inflation figures is a blow for the Chancellor as he prepares to reveal his eleventh Budget.

It came as one of the most respected former members of the Bank's committee which sets interest rates warned the good times could be over.

Speaking to the Treasury Select Committee yesterday, Charles Goodhart said: "We have been living in a golden age. It's been really too good to last."

Shadow Chancellor George Osborne said rising inflation and other mounting pressures on the Chancellor were making it "the week from hell."

Another rate rise - which would be the fourth in less than a year - would push many homebuyers over the edge.

Over the last year, the Office for National Statistics reveals that mortgage interest payments have jumped 22 per cent, placing an intolerable burden on many homeowners.

Monthly repayments on a typical £150,000 mortgage have jumped £71, on top of other rising household bills.

Debt charities have been warning that homeowners are already 'on the rack' due to interest rate rises in August, November and January.

But the pressure to buy a home means nearly £1billion a day is still being lent in mortgages, according to figures published yesterday by the Council of Mortgage Lenders.

Many buyers fear they will be frozen off the housing ladder forever if they do not buy, despite the record prices.

Ironically, interest rates will have to rise to cool inflation which is being fuelled by the rising cost of mortgages.

The Office for National Statistics said soaring mortgage interest payments are the main reason that inflation is going up.

The retail prices index of 4.6 per cent is a level not seen since August 1991. It is almost double the inflation rate in February last year, which is particularly painful for workers' whose annual pay rise was only 2 or 3 per cent.

On Tuesday council workers were offered a pay rise of a "paltry" 2 per cent, which was attacked by unions, while GPs have been offered nothing at all.

The inflation figures sparked a renewed attack on Labour for using a different measure of inflation which excludes housing costs.

Its 'chosen' inflation rate is the consumer price index, which rose from 2.7 per cent to

2.8 per cent in February, far above Labour's own target of 2 per cent.

The increase was blamed on the rising cost of European air fares, which is linked to the Chancellor's decision to double air passenger duty from £5 to £10 on short-haul flights.

The winners of a rate rise will be savers who will see interest on their investments going up.