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LONDON: British 12-month inflation surged to a 16-year high point of 5.2 per cent in September owing to soaring energy bills, official data showed on Tuesday but analysts said it would plunge in the coming months.
Consumer Prices Index (CPI) annual inflation - the government's target measure - had stood at 4.7 per cent in August, the Office for National Statistics (ONS) said in a statement.
September's level was the highest since March 1992, when it stood at 7.1 per cent.
Analysts' consensus forecast had been for a rise to 5.0 per cent, while the government has a target rate of 2.0 per cent for annual inflation.
"Despite September's bigger-than-expected jump, consumer price inflation is almost certainly now at its peak, or very near to it," said Howard Archer, chief Britain economist at the Global Insight consultancy in London.
"Indeed, consumer price inflation should soon start falling back sharply and we believe it could well be back down to its 2.0 per cent target level by the end of 2009."
Archer added: "Prolonged very weak economic activity, faster rising unemployment and extended tight credit conditions will increasingly dilute underlying inflationary pressures ... In addition, available evidence clearly points to wage moderation continuing.
"Meanwhile, the recent marked retreat in oil and commodity prices will obviously help matters," said the economist.
The ONS added on Tuesday that Britain's consumer prices index had risen by 0.5 per cent in September on a monthly basis, down from 0.6 per cent in August.
Analysts had forecast a rise of 0.4 per cent.
"The key issue now is just how far and fast inflation will drop back as the food and energy effects which have pushed it up so sharply over the last year finally fade or go into reverse," said Jonathan Loynes, chief European economist at Capital Economics.
"Inflation should be back below four per cent by the end of the year and then start to drop very sharply next spring.
"By the autumn (of 2009 in Britain), we expect it to have fallen to 1.0 per cent but it could go lower - and even turn negative - if oil prices fall much further."
Electricity price inflation rose to 30.3 per cent year-on-year, up from 18.0 per cent in August, said the ONS.
Gas inflation rose to 49.9 per cent, up from 27.7 per cent in August, noted the statistics office.
"The largest upward pressure on the CPI annual rate came from housing and household services because of rises in average gas and electricity bills this year compared with falls last year," the ONS said.
The Bank of England had forecast in August that inflation was set to rise sharply to around 5.0 per cent this year, before declining rapidly toward the government's target of 2.0 per cent from early 2009.
Its prediction had been based on interest rates remaining at 5.0 per cent.
However, last week the Bank of England unexpectedly decided to slash British borrowing costs by a half-point to 4.50 per cent in an emergency rate-cutting drive by major central banks around the world.
Britain's biggest rate reduction for seven years came as the country faces the growing threat of a recession - two or more quarters of negative economic growth - amid a global financial crisis. - AFP/ms
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