UK inflation rises further above Bank of England's target

Official figures show that inflation in Britain spiked up to 2.9 percent in the year to August, more than anticipated in the markets.

The Office for National Statistics said Tuesday that the increase from the previous month's 2.6 percent rate was largely due to rising prices for clothing and motor fuels.

The scale of the increase was not expected — the consensus in the markets was that inflation would increase to 2.8 percent.

Inflation is now well above the Bank of England's target of 2 percent, which is likely to stoke speculation that the central bank may raise interest rates sooner rather than later to keep a lid on price pressures in the economy. However, policymakers are expected to keep interest rates on hold at their meeting on Thursday.