Super-octane petrol prices drove inflation another notch higher in August, breaching Gordon Brown's two per cent target for the third month.
The official measure of inflation is now at its highest point since it was first measured in this form in 1997.
The Consumer Prices Index rose to 2.4 per cent from August last year after going 0.35 per cent higher between July and August.
And there is more to come. Although crude oil prices dipped sharply yesterday - Brent crude for October delivery eased by seven cents to $61.73, ten per cent down from its post-Katrina peak - petrol has already risen more this month than it did in August.
National Statistics based last month's inflation numbers on an average price of
90.4p a litre for low-sulphur unleaded, up from 87.5p in July. Yesterday the same average was 95.1p and rising.
Petrol prices went up in August last year, too, but by only 0.5p. The difference, combined with knock- on effects on the cost of air and sea travel, along with small increases in prices for nonseasonal food, drove prices for all goods up faster last month than those for services.
Over the year, though, inflation was still driven overwhelmingly by prices in the service economy. These rose by 4.5 per cent, unchanged from July, while goods were only 0.6 per cent higher, after a 0.5 per cent increase in July.
Taking account of the slowdown in the housing market, which has largely offset this summer's runaway oil prices, inflation looks much more moderate.
The long-established Retail Prices Index, the basis for the state pension and many other benefits and still used as a benchmark by most wage bargainers, actually eased off last month to 2.8 per cent from 2.9 per cent in July.
This is because the RPI takes account of house prices and other costs of home ownership and the CPI ignores them all. These housing cost have now risen by 6.5 per cent over the latest 12 months.
Petrol prices alone added 0.08 percentage points to the annual increase in the CPI rate last month.
The Bank of England had predicted inflation would rise temporarily above its target this autumn when it cut its official interest rate to 4.5 per cent in August.
