LONDON, Sept 16: Britain's annual inflation rate climbed in line with analysts' expectations in August, official data showed Wednesday, as the Middle East war drove up fuel prices.
The Consumer Prices Index rose 3.1 percent in the 12 months to August, up from 2.9 percent the previous month, the Office for National Statistics said.
Higher inflation adds pressure on Prime Minister Andy Burnham and his finance minister John Healey to ease the cost of living for households ahead of the Labour government's budget update next month.
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The Bank of England is forecast to maintain its benchmark interest rate at 3.75 percent on Thursday as the UK economy struggles for growth.
To tackle persistently high consumer prices, the US Federal Reserve is expected Wednesday to also lift borrowing costs, following a similar move by the European Central Bank last week.
With central bank interest rates on the rise -- and government bond yields reaching multi-decade highs in recent weeks -- Healey has pledged to maintain strict fiscal discipline.
But he has not been drawn on whether this means his budget on October 28 will include new tax rises.
Analysts expect inflation to rise towards the end of the year as higher energy costs feed through to bills further, with little sign of a deal to end the Middle East war.
"With the situation in the Middle East looking increasingly fraught, the expectation is that inflation will continue to climb higher until the end of the year at a minimum," said Richard Carter, head of fixed interest research at Quilter Cheviot.
"For the government, today's figures are a kick in the teeth for an administration that wants to make easing the cost of living its central mission," he added.
