Britain’s annual inflation rate increased to 3.1 per cent in the 12 months to August, up from 2.9 per cent the previous month. Official figures released on Wednesday showed the rise matched analysts’ expectations.

Higher fuel prices, driven by the ongoing conflict in the Middle East, were a major factor behind the increase. The Consumer Prices Index data came from the Office for National Statistics.

The higher inflation adds pressure on Prime Minister Andy Burnham and Finance Minister John Healey to ease the cost of living for households. The government is preparing its budget update for next month.

The Bank of England is widely expected to keep its benchmark interest rate at 3.75 per cent on Thursday as the UK economy continues to struggle for growth. Other major central banks, including the US Federal Reserve and the European Central Bank, have recently moved to raise borrowing costs.

Analysts expect inflation to climb further towards the end of the year as higher energy costs feed through to household bills. There is little sign of an end to the Middle East conflict that has been pushing up fuel prices.

Photo credit: Punch Newspaper