The National Times - British PM says to make 'difficult decisions' as inflation rises

The Consumer Prices Index rose 3.1 percent in the 12 months to August, up from 2.9 percent the previous month, the Office for National Statistics said.

The figure, which met analysts' expectations, piles pressure on Burnham and his finance minister John Healey to ease the cost of living for households in the Labour government's budget update next month.

"We will take difficult decisions to make sure the economy remains on track," Burnham said during a visit to a McLaren car factory south of London.

While acknowledging that the impact of the Middle East war on inflation was "a challenge", he said the government "won't take risks with people's living standards".

Since entering government in July, Burnham has offered the British public some relatively low-cost relief such as cheaper bus fares and a tax cut on electricity bills.

But sceptics have warned that financial constraints mean he will struggle to find wiggle room to fund bigger commitments.

To tackle persistently high consumer prices, the US Federal Reserve is expected Wednesday to lift interest rates, following a similar move by the European Central Bank last week.

The Bank of England, however, is forecast to maintain its benchmark interest rate at 3.75 percent on Thursday as the UK economy struggles for growth.

- Fiscal discipline? -

Responding to Wednesday's figures, Healey said "the war in the Middle East is impacting on inflation worldwide, not just here at home. In our bills, our weekly shop and at the petrol pumps".

With central bank interest rates on the rise -- and government bond yields reaching multi-decade highs in recent weeks -- Healey has pledged to maintain strict fiscal discipline.

But he has not been drawn on whether this means his budget on October 28 will include new tax rises to help reduce Britain's debt pile.

Healey has previously committed to following the fiscal rules laid out by his predecessor Rachel Reeves, which state that day-to-day spending must balance with government tax receipts.

While the UK economy unexpectedly managed to grow in July, price pressures are set to ramp up towards the end of the year as higher energy costs feed through to the wider economy.

Crude oil and gas prices have surged this month as the US-Iran war witnessed a flare-up, adding to concerns about inflationary pressures worldwide.

"With the situation in the Middle East looking increasingly fraught, the expectation is that inflation will continue to climb until the end of the year at a minimum," said Richard Carter, head of fixed interest research at Quilter Cheviot.

"For the government, today's figures are a kick in the teeth for an administration that wants to make easing the cost of living its central mission," he added.

V.Allen--TNT