After years of well-contained prices, Bank of England policymakers fear Britons could make their job harder by overreacting if inflation rises too far.

Climbing petrol prices and soaring household bills have pushed inflation well above the two per cent target in recent months to a near-nineyear high. The worry for policymakers is if people expect higher inflation, they may try to compensate by demanding bigger wage increases. That could push up inflation throughout the economy.

So far financial markets have remained unconcerned the rise in household costs will translate into interest rate rises. Nevertheless, surging crude oil prices have pushed petrol to near a pound a litre, and utility bills are soaring.

"In the grand scheme of things this is not huge inflation by any stretch of the imagination," said George Buckley, economist at Deutsche Bank.

"The problem is people hear the news, hear economists talking about inflation doubling and get a false sense of what is going on."

Inflation was 1.1 per cent a year ago. Members of the BoE's Monetary Policy Committee, who meet again tomorrow for their latest monthly interest setting meeting, are highlighting the risks.

Minutes released from September's MPC meeting, when rates were left at 4.5 per cent following a cut in August, said there "was no room for complacency" on inflation.

Even though items such as clothes and electronic goods have cheapened, consumers may believe inflation is rising as they focus on high-profile, politically sensitive costs like petrol, said Mr Buckley.

So far the BoE view that inflation expectations remain " well- anchored" seems accurate.

Expectations for inflation over the coming year edged up to a median 2.2 per cent in August from 2.0 per cent in May, but this was the same as February's reading, according to the Bank's quarterly inflation attitudes survey.

Average earnings data, at just over four per cent, remains well below a level likely to concern policymakers.

In the manufacturing sector at least, the survey evidence is that wage growth is being capped by firms freezing pay or deferring settlements. With employment prospects dimming in the larger services sector big pay rises look out of the question.

But it could change if economic activity recovers as the BoE predicts. Firms would then be able to pass on higher energy and commodity costs

rather then squeeze margins and find it tougher to turn down wage demands.

Two surveys this week suggest it may be starting. Manufacturers are busier than at any time in ten years, according to the latest quarterly economic survey produced by Birmingham Chamber of Commerce and Industry.

Nationally, activity unexpectedly expanded at its fastest pace in six months in September, with output growth the strongest this year and price rises charged at a seven-month high, claimed the Chartered Institute of Purchasing and Supply/RBS purchasing managers' index.

Given the BoE targets inflation further out, economists say policymakers are right to be concerned.

"We are not looking for drastic change over months, the focus is on the two-year horizon," said Alan Clarke, UK economist at BNP Paribas.