Prominent forecasters say the surprise rise in inflation announced yesterday may be just the start of worse things to come.

Inflation rose sharply to 2.3% in October after a hike in energy prices. Economists had forecast a rise to 2.2% after a three-year low of 1.7% in September. The rise effectively rules out any further interest rate fall in the near future. Markets had priced in a 22% chance of another Bank of England rate cut to 4.5% in December but this has dropped to 16% following the release of the new inflation data.

But things could be worse than that suggests Sarah Coles, head of personal finance at business consultancy Hargreaves Lansdown.

She says:“This month’s unwelcome return above the inflation target is unlikely to be a one-off: inflationary pressures look set to keep prices rising more quickly. 

“The good news is that public sector pay rises and the rise in the minimum wage should help ease the immediate pain of higher prices for some people. The bad news is that this could end up feeding into higher prices further down the line, spurring another round of inflation. 

“Retailers are also warning that higher National Insurance could power price rises, and with inflationary pressure building, rate cuts might be off the agenda for a while yet.

“The fact that core inflation rose again, from 3.2% to 3.3%, indicates that rising energy prices aren’t the only issue. Even when they’re stripped out, prices are on the up. Meanwhile, higher services inflation could be the canary in the coal mine of the impact that higher wages could end up having on inflation more broadly.”

The next base rate decision is taken by the Bank of England on December 19 – and there’s one more set of inflation data before then.