Page last updated at 10:54 GMT, Tuesday, 15 July 2008 11:54 UK

The factors behind the inflation rise

Highland cattle
Beef prices have risen compared with a year ago
The price of meat - especially the cost of beef - was one of the key factors in the rising inflation rate, according to official statistics.

Prices of fruit, bread and cereals also rose as UK CPI inflation increased to 3.8% in June from 3.3% in May.

Motorists were hit with the average price of petrol up by 5.3p a litre between May and June, the Office of National Statistics (ONS) said.

Leisure activities also cost more, with price rises in foreign holidays and DVDs.

The Retail Prices Index (RPI) measure of inflation, which includes mortgage payments, rose to 4.6% in June from 4.3% the previous month.

This wider figure is calculated by studying the cost of a basket of 650 goods and services which is updated annually to reflect spending habits.

Rising rate

When inflation leapt in May, the fact that many of the items rising in price were essentials caused concern.

Many feared that groups such as pensioners and young families would be hit much harder by the rising prices than others.

Fruit - which saw a price index rise of 6.1% month-on-month - as well as bread and cereals (up 3%) were again key factors behind the pick-up in inflation during June.

The ONS said beef was a significant driver in the increasing cost of meat, and there was a slight effect on average prices from the growing cost of milk, cheese and eggs.

There was better news for fish lovers - the price index for fish fell by 3.3% in June compared with May.

Motorists will not be surprised to hear that average petrol prices rose 5.3p a litre during the month to 117.6p and diesel also rose 7.3p last month compared with just 0.6p 12 months earlier.

Going out

Gas and electricity bills did not contribute significantly to the inflation rate, but are widely predicted to rise in the autumn.

Music festival
The cost of live music events has fallen this year

This predicted increase, with wholesale prices rising, is expected to cause inflationary pressure later in the year, with the rate now even more likely to lift above 4% by the end of the year.

For those with money to spend on recreation and leisure, the cost of DVDs and computer games has risen, and foreign holidays rose this year after falling in the previous 12 months.

But the cost of live music events fell and paperback books also bucked the previous year's trend by dropping in price.

Clothing and footwear saw significant discounts compared with a year ago and alcohol prices dipped slightly.

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