Inflation is expected to climb to its highest level in nearly two years, with official figures next week likely to show a rise to four per cent in September.
The increase would mark the steepest rate since January 2024 and an increase from 3.8 per cent in August.
The jump reinforces comments from a senior Bank of England policymaker, who warned that interest rates should be cut only at a "cautious pace" to avoid reigniting price pressures.
The jump would leave inflation running at twice the Bank of England’s two per cent target, sparking fresh concern about living costs.
Rising prices for essentials like food, fuel and energy could once again squeeze household budgets across the country.
Huw Pill, the Bank of England's chief economist, has called for a measured approach to reducing borrowing costs.
Speaking at an ICAEW event on Friday, he said he supported lowering rates at a "cautious pace" to control price pressures.
"Further cuts in bank rate over the coming year" are expected, Pill stated, but emphasised the need to "guard against the risk of cutting rates either too far or too fast".
City analysts now anticipate that interest rates will stay at their current 4 per cent level until spring at the earliest, as policymakers grapple with persistent inflationary pressures.
Inflation to hit two-year high as Bank of England warns rate cuts must be cautious
| GETTYThe September inflation figure carries particular significance as it determines the calculation for benefit and pension adjustments due next spring.
This timing adds pressure on Chancellor Rachel Reeves ahead of her budget announcement next month, where she faces the challenge of addressing tens of billions in tax increases.
Households are already experiencing the strain of accelerating prices. Grocery costs have surged by more than five per cent in the year to August, marking the sharpest increase since January 2024.
Britons have been forced to contend with inflation hiked prices | GETTY Further financial pressure looms as gas, electricity, water and council tax bills are all expected to rise in the coming year.
The International Monetary Fund has projected that Britain will experience the highest inflation among G7 nations both this year and next.
This outlook suggests that any salary increases workers receive could be negated by rising prices, with the IMF warning that living standards will see no growth in the years ahead.
A senior Bank of England policymaker warned that interest rates should be cut only at a cautious pace
| PACapital Economics researchers indicated that September might represent the highest point of the current inflationary period, though they noted that Britain's capacity to control price rises has taken a "kicking" over the past twelve months.
S&P Global analysts suggested that September's figures could be influenced by the continuing effects of tax and pay changes implemented in April.
More From GB News