Annual inflation has risen to 4.7% in August, its highest level since records began in 1997.
Rising fuel and food costs caused the Consumer Price Index to increase, with food inflation reaching a record 14.5% on the year, up from 13.7% in July, the Office for National Statistics said.
The cost of bread and cereals rose to 17.4% on the year, with meat reaching 17.1%, its figures revealed.
While electricity prices were up 18% and gas prices up by 27.7% on the year, the price of petrol fell by 5.5p/litre between July and August, while diesel prices fell by 6.7p/litre.
Bank of England Governor Mervyn King has written another letter to the chancellor explaining why inflation is above the government’s annual inflation target of 2%.
The Bank of England’s Monetary Policy Committee has been unable to consider an interest rate cut to boost the UK’s economy while inflation keeps rising.
The Committee said it expected inflation to peak soon at about 5%, but said it expected inflation to remain high until well into 2009.