Britain?s inflation rate rose more than expected last month and above the central bank?s 2.0 percent target for the first time since June on higher petrol and food costs, official data showed yesterday. The Office for National Statistics (ONS) said consumer prices rose 0.5 percent in October, taking the annual rate up to 2.1 percent from 1.8 in September. Analysts had predicted a 1.9 percent annual rise.

With food and energy prices still rising and factory gate inflation at a 12-year high, inflation could climb further and the figures pushed sterling up against the dollar and the euro as dealers decided the Bank of England would be in no hurry to cut interest rates as a result. «The jump back up to 2.1 percent isn?t necessarily a barrier to a near-term cut in interest rates, but it may make the Monetary Policy Committee more cautious,» said Philip Shaw, chief UK economist at Investec.

The central bank held borrowing costs at a six-year high of 5.75 percent last week and will publish today its new quarterly inflation forecasts. Many analysts have been expecting a rate cut to 5.5 percent early next year given a weaker outlook for the economy in the wake of global financial market turbulence, but policymakers have expressed concern about rising price pressures. A survey earlier on yesterday showed house prices falling at their fastest rate in more than two years and other indicators have been pointing to a softening in economic growth.

The ONS said the chief culprit for the rise in inflation was higher petrol costs, which added 0.29 percentage points to the annual rate. Food price inflation, particularly meat and fruit, added 0.12 percentage points. Oil prices have neared $100 a barrel and wheat prices have remained high. British food maker Premier Foods said on Monday it was raising bread prices for the second time in three months. The ONS said the biggest downward impact came from household bills as gas and electricity prices continued to come down after huge increases last year.

The cost of electricity, gas and other fuels fell by 4.0 percent on the year, the biggest decline since August 1998. The retail price index ? on which many wage deals are based ? also rose more than expected, with prices up 4.2 percent on the year.