UK inflation rose to 4.7% in August, the highest level since records began in 1997, figures from the Office for National Statistics revealed.

Rising energy, fuel and food bills all contributed to the increase in inflation, which was up from 4.4% in July.

The news that inflation has continued to rise will make it difficult for the Bank of England to countenance interest rate cuts in the near future, which are desperately needed as the UK spirals towards recession.

But many analysts believe inflation will peak at around 5% before slipping back to more usual levels in 2009.

The Retail Prices Index fell from 5% in July to 4.8%, as retailers cut prices in a bid to win back shoppers.