Inflation set to top 4% – and rising

SHARP rises in utility bills could push inflation above 4 per cent this week.

Economists expect the Consumer Price Index to reach 4.2 per cent tomorrow, up from June's figure of 3.8 per cent and more than twice the government's target rate of 2 per cent.

But next month's figures are likely to be even worse, amid soaring food costs.

The warning comes as a monthly survey by the Grocer magazine revealed that food inflation in the UK rocketed last month, with prices 4 per cent up on June. A shopping trolley of 100 products from the big four supermarket chains rose from £198.96 to £207.31.

It is believed that lower oil prices will not push next month's figures any lower as the falling cost of petrol will not have an effect on inflation until later.

Sebastain Mackay, a senior economist at Scottish Widows Investment Partnership, said: "It's really from August that the fall in petrol prices will start to come through, but by then you will feel the impact of increased utility bills."

Bank of England Governor Mervyn King is expected to have to write to the chancellor explaining why targets have been missed.