UK inflation rose to 3.1% in the year to August, up from 2.9% the previous month, in line with expectations but stoking fears of worse to come as the Middle East crisis pushes up energy costs. Economists warn this could be the start of a fresh upward trend, with some forecasting CPI could approach 4% next year, putting pressure on the Bank of England to raise interest rates and complicating the Chancellor's efforts to balance the books at next month's Budget.

Brent Crude was trading at $108 a barrel, with diesel prices at a four-year high, while some analysts estimate energy bills could rise by a quarter in January. The ONS said sharp rises in petrol, diesel and long-haul airfares drove the increase, though core inflation (excluding energy, food, alcohol and tobacco) held steady at 2.6%. The figures came alongside gloomy jobs data showing payroll numbers down 145,000 over the past year and vacancies at a five-year low, while the Bank's Monetary Policy Committee is expected to hold rates at 3.75% at its decision the following day.