THE prospect of an earlier-than-expected rise in interest rates has become a possibility after official figures out yesterday revealed that inflation soared above forecasts last month.

City experts said the Bank of England might need to act soon to dampen down the high street spending spree.

The Office for National Statistics (ONS) showed the underlying rate of inflation jumped to 2.6 per cent last month, from 1.9 per cent in December.

It marks only the second time the figure, which excludes mortgage payments, has burst above the Bank of England's target rate of 2.5 per cent since March 1999.

While higher petrol and seasonal food prices contributed to the rise, the ONS said there were also lower discounts in the New Year sales.

There were fewer special offers for women's and men's clothing, footwear and DIY products than a year ago as stores cashed in on the consumer boom.

The Bank of England's long-term outlook for inflation will be made today in its quarterly inflation report.

Analysts had predicted a figure of between 2.1 per cent and 2.2 per cent.