Inflation to soar amid energy rise

The Consumer Prices Index (CPI) official measure of inflation is forecast to have leapt from 2.2% in January to 2.5% last month as the recent electricity and gas price increases kicked in.

Consumers have seen their electricity and gas bills rocket after five of the six main suppliers hiked prices to offset rising wholesale energy costs.

The Office for National Statistics (ONS) said last month that it was changing the way it calculates inflation to reflect the trend for price increases to come into effect sooner.

Instead of phasing in increases over a four-month period, the ONS will include gas and electricity rises from the day they are introduced, which will see the rises hit all in one month.

Economists are predicting that this could have pushed inflation up by about 0.3% last month, with some even braced for a rise to 2.6% as increasing food and petrol costs add to the energy price pressure.

Crude oil prices rose to new highs near to 112 US dollars a barrel yesterday, forcing the cost of petrol at the forecourts up to 106.7p a litre, with diesel at 113.9p, according to latest figures from the AA.

Consumers have also faced steep increases in their food bills, with staples such as bread, milk and cheese among those to have rocketed in cost in recent months.

January's CPI data revealed that annual food price inflation rose to 6.1%, which was its highest since June 2001, while fuel inflation rose at its highest annual rate since records began more than 11 years ago.

A further rise in CPI in February would mean inflation has remained above the Government's 2% target for the fifth month in a row.