Inflation ‘set to reach 3%’

INFLATION hit a five-year high last month, official figures out next week are set to show.

The Consumer Price Index is forecast to rise from 2.9% to 3% for September, driven by rising airfares, fuel and electricity prices.

The Bank of England’s inflation target is 2%, meaning it is more likely to raise the base rate.

Economist Philip Shaw, from Investec, said a rise to 3%, would be “on the edge of the Monetary Policy Committee’s tolerance threshold.” The Bank has so far let CPI top its target.