Inflation likely to hit 5% rate

The annual rate of UK consumer inflation is expected to hit 5%, with higher energy bills to blame for much of the rise. Meanwhile the Retail Prices Index (RPI) is expected to rise to about 4.9%. September's RPI figures are especially important because they are used to calculate state pensions and benefits for the coming year. But most analysts believe the cost of living will soon start to fall back as wholesale oil prices drop further. The Bank of England issued the warning that the Consumer Prices Index (CPI) - the government's preferred measure - is set to hit 5%. Increased food and energy prices this year have been blamed for taking inflation beyond the government's target of 2%. Economic downturn The rate was 4.7% in August, up from 4.4% the month before. The largest contributor to August's rise in inflation was higher... [read full story]