Leisure costs push inflation up

Higher computer game prices were partly to blame

Rising prices of computer games and holidays helped to push the UK inflation rate higher in June.

The consumer price index (CPI) measure of inflation rose to 1.6%, from 1.5% in May, according to official figures.

The Bank of England has been raising base rates recently to keep inflation in check, although it kept rates on hold at 4.5% earlier this month.

The increase in the CPI measure means that UK inflation is at its highest level for more than a year.

However, the CPI figure still remains below the Bank's target of 2%.

'Grinding higher'

The Office for National Statistics (ONS) said the largest upward influence on inflation came from toys and computer games.

There isn't a huge inflation problem, but these figures suggest that further interest rate rises will be needed Ross Walker, Royal Bank of Scotland UK economist

There was also an upward effect from the cost of foreign holidays booked in advance.

Furniture and household equipment prices also contributed to higher inflation, with fewer retailers offering special deals than last year.

Ross Walker, a UK economist with Royal Bank of Scotland, said: "Inflation is grinding higher and is going to continue to do so on the back of the global economy."

He said: "I think we are looking at a rise in interest rates in August by 25 basis points. There isn't a huge inflation problem, but these figures suggest that further interest rate rises will be needed."

Cheaper petrol

Petrol prices slipped a touch after recent rises, but the fall was by less than a corresponding drop in June last year, the ONS said.

The biggest downward pressure on CPI inflation came from miscellaneous goods and financial services, in particular reduced charges for foreign exchange services.

The headline rate of RPI inflation, which includes mortgage interest payments, also rose from 2.8% to 3%.

The former inflation target, RPIX, which excludes mortgage interest payments, remained unchanged at 2.3%.