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Inflation is tipped to come in at its highest level since January last year on Wednesday morning.

A 4% figure is expected to be revealed by the Office for National Statistics- up from the current 3.8% rate.

Inflation measures the pace of price shifts across different sectors of the economy on a rolling 12-month basis. Those shifts are then used to create a headline figure.

The increase in the consumer prices index measure this time, economists say, is likely to have been driven by fuel prices rising last month when they fell sharply during September 2024.

Other factors may include rising prices for second-hand cars.

The good news, however, is that most believe inflation will peak at this level and start to fall sharply in the coming months, barring any economic shocks.

This does not mean that prices will fall, just that they’re not rising as fast as they were.

A slowing, or expected easing, in inflation will give the Bank of England more scope to cut interest rates from the current level of 4%.

LSEG data shows 90% of financial market participants expect no change to the Bank rate when policymakers meet early next month.

However, there is a greater chance of an early Christmas present for borrowers at the meeting slated for 18 December.

At 4%, the pace of inflation would be double the Bank’s target rate and prohibitive for a rate cut.

Inflation data covering October and November would need to deliver significant progress for a further rate cut to materialise by the year’s end.

Economists are more split on this, with some warning that it could be the second half of next year before the Bank rate can be cut.

Much will depend on factors such as winter energy costs and what Rachel Reeves puts in her budget at the end of November.

The chancellor’s first budget was blamed for businesses raising prices to help offset rising employment costs. This was seen mostly at supermarkets.

International Monetary Fund forecasts last week saw the UK enduring the highest inflation across the G7 both this year and next.

It isn’t the sort of headline that supports an interest rate cut in the near term.