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Last Updated: Tuesday, 12 September 2006, 08:42 GMT 09:42 UK
UK inflation up to 2.5% in August
Cash till
The Bank has warned that inflation could eventually rise above 3%
UK inflation accelerated to 2.5% in August, the fourth month in a row it has topped the government's 2% target.

August's 2.5% Consumer Prices Index (CPI) figure from the Office for National Statistics was a slight increase on July's 2.4% level.

Meanwhile, the headline RPI rate - which includes mortgage interest payments - rose to 3.4% from 3.3%.

The latest figures will renew pressure on the Bank of England to raise interest rates, analysts said.

Computer games

The Bank of England last increased interest rates by a quarter of a percentage point to 4.75% in August.

With the Bank's Monetary Policy Committee voting to keep rates on hold in September, some analysts now expect a further rise in November.

Last month, the Bank's governor, Mervyn King, warned there was a 50-50 chance that inflation would rise above 3% in the next six months, and a good chance it would rise above 3% over the next two years.

The Office for National Statistics said an increase in the price of computer games and toys in August had outweighed a decline in petrol prices and air fares.

August's 2.5% CPI figure is the same as in June, and is the joint highest since Labour entered government in 1997.

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