Inflation increases to 3.1% after jump in petrol prices

Inflation increasing after a surge in petrol prices will put pressure on the Bank of England to raise rates, experts have said.

According to the Office for National Statistics (ONS), Consumer Prices Index (CPI) inflation rose to 3.1 per cent in August, up from 2.9 per cent in July.

Susannah Streeter, chief investment strategist at Wealth Club, said: “The pressure on the Bank of England to raise rates is mounting, although a hold at 3.75 per cent is still expected tomorrow.

“The bigger shift is happening in expectations for the months ahead, with markets now pricing in multiple hikes as the energy shock threatens to keep inflation elevated.

“That is going to pile on the financial pain for those looking to remortgage or get onto the housing ladder.

“With energy costs rising and borrowing costs looking set to surge higher, there looks set to be a fresh squeeze on spending, so consumers are going to become even choosier about where they spend their available cash.”