RISING petrol prices pushed inflation to its highest level last month since 1997, official figures showed.

With motorists facing higher fuel bills because of record oil prices, the annual rate of Consumer Prices Index (CPI) inflation rose to 2.3 per cent last month, from two per cent the previous month.

Experts said the higher-than-expected figure made it unlikely the Bank of England would cut interest rates again this year.

Petrol prices increased by 3.3 per cent over the month and 9.8 per cent on the year, the Office for National Statistics (ONS) said. Recent figures from the transport industry revealed motorists were paying an average of more than 90p for a litre of unleaded petrol.

Surging oil prices have fuelled the increase, which was the biggest contributor to the rise in inflation.

Economists said inflation now appeared to have surged ahead of the Bank of England's central forecast, reducing the likelihood of another cut in the cost of borrowing this year. The bank cut rates for the first time in two years this month.

Philip Shaw, at Investec Securities, said: "The figures are worse than expected. They tend to support our view that the monetary policy committee (MPC) will keep rates on hold for the remainder of the year."

He did not believe the figures removed the chance of a base rate cut in the medium to long term, saying rates would probably still be lowered early next year.

In its quarterly Inflation Report last week, the Bank predicted CPI would rise above the Government's two per cent target in the short term.

The bank said it would then ease off before once again passing this level at the end of the two-year forecast period.

Experts expected annual CPI to rise by 2.1 per cent during last month.

While they had factored in the rise in petrol price inflation, they said other factors, such as "disappointing" summer sales, were more surprising.

Furniture prices hardly changed last month, compared with large falls last year, while clothing and footwear discounts were not as large as expected.

Meanwhile, the headline rate of Retail Price Index (RPI) inflation, which includes mortgage interest payments, was unchanged at 2.9 per cent last month