Inflation hit record highs in June pushed up by the soaring cost of food and fuel.

The consumer price index (CPI), the Bank of England's target measure of inflation rose to 3.8 per cent last month, up from 3.3 per cent in May and nearly double the 2 per cent target, official figures show.

CPI is now at its highest since records began in January 1997. Based on historical data prior to this, inflation was last higher in May 1992.

The cost of food and non-alcoholic beverages rose 2.1 per cent during the month, pushing the annual rate of growth to 9.5 per cent, up from 7.8 per cent in May.

Overall food inflation has risen to 10.6 per cent, up from 8.7 per cent in May. This was due to rising meat costs, particularly beef. Meat rose to 11.2 per cent, up from 8.8 per cent in May.

Petrol prices have also spiralled, with the average cost of petrol at the pumps increasing by 5.3 pence per litre between May and June this year, compared with a rise of 1.3 pence last year. Electricity and gas prices were 13.8 per cent higher than in June last year, up from the annual rise of 11.2 per cent in May.

The cost of holidays, DVDs, computer games and digital cameras also rose.

Even more worrying for the Bank, which is trying to control spiralling inflation, is that core inflation, which strips out volatile items such as food and fuel, rose to 1.6 per cent, the highest since last August.

The headline rate of RPI inflation, which includes mortgage interest payments and which many workers refer to when negotiating pay deals, rose to 4.6 per cent in June from 4.3 per cent in May, the Office for National Statistics said. RPIX inflation, which excludes mortgage payments, rose to 4.8 per cent, up from 4.4 per cent in May.

Mervyn King, the Governor of the Bank of England, has already said that inflation is set to rise to more than 4 per cent later this year. But some economists warn that the pressure on consumers wallets could get even worse.

Jonathan Loynes, of Capital Economics, said: "Tthere is worse to come, with the headline rate heading for 4.5 per cent or even 5.0 per centby the autumn. "

Today's figures will also dent hopes that the Bank may lower interest rates to shore up the faltering econonmy as it tries to contain these inflationary pressures. Howard Archer, of Global Insight, the economic consultancy, said: "We believe the next move in interest rates will be down, but probably not until 2009 unless the economy really falls off a cliff over the coming months."

The only areas where prices have fallen is clothing, shoes and alcohol. The ONS said there the price of spirits decreased this year after rising last year, and the price of wine rose more slowly than last year.

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