CPI increase driven by fuel rises

People in the UK have been hit by increased living costs after fuel price rises sent inflation to 3.2%, it has been revealed.

Bank of England Governor Mervyn King has been forced to write yet another letter to the Chancellor - this will be his fourth - to explain why the Consumer Prices Index (CPI) has increased from its 3.1% level in September, remaining well above the 2% target.

With motorists feeling the pinch from high fuel prices, it has never been more important for them to secure the best possiblecar insurance andbreakdown cover deals.

The Office for National Statistics attributed the CPI increase to the soaring costs of petrol after the Government's fuel duty rises at the start of October.

The Bank boss has to publish an open letter if CPI is more than 1% above the 2% target and thereafter every three months if it fails to drop back.

CPI is now back up to the level seen in June having remained stubbornly above target since November last year.

And there is expected to be further pain to come for households, with the Bank warning in its latest forecast report that higher bills and the impending VAT rise could see CPI spike to 3.5% over the coming months

The ONS said petrol prices rose by 2.1p a litre between September and October, while beer, wine and tobacco were also more expensive.

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