Increasing prices - including food - have sent the Consumer Prices Index inflation rate up to 3.1 per cent. Another interest rate rise, from the present 5.25 per cent, is widely expected next month.
Further increases would concern retailers - particularly those of big-ticket items such as furniture, which fear that consumers would rein in spending as the burden of debt repayment grew. A fortnight ago, Carpetright blamed the most recent interest rate rise for a profit warning.
However, nine economists, including former Treasury adviser Tim Congdon, have written an open letter to the Bank of England's Monetary Policy Committee warning that action must be taken to curb inflation. Congdon envisaged interest rates reaching 6 per cent, but thought they may have to be increased to 7.5 per cent.