Higher mortgage rates "help" increase inflation

Rising mortgage payments have driven up the Retail Price Index (RPI) - a key measure of inflation that includes mortgage payments.

The ONS (Office For National Statistics) said the RPI jumped to 4.6% in February 2007 from 4.2% in January. This represents the highest level for more than 15 years and fuels concerns that interest rates may rise again in March.

The ONS stated that the rise was said to be caused by lenders passing January's interest rate rise to homeowners.

The Bank of England's measure - The CPI (Consumer Prices Index) - also rose to 2.8% in February from 2.7%, fuelled by many areas such as food, car purchases and rising air fares.

The Chief UK & European economist at Global Insight, Howard Archer, said: "We suspect that February's inflation data reinforces the likelihood that the Bank of England will raise interest rates by a final quarter-point to 5.5% in April or May.