The UK economy is forecast to grow faster this year than previously anticipated helped by stronger household consumption, according to a report published today.

And inflation will reach a peak of 2.8% in the first quarter of 2007 caused by rising food and energy costs, the quarterly economic forecast from business group the Confederation of British Industry indicates.

This increases the likelihood the Bank of England will raise interest rates by a quarter of a point in November.

According to the CBI, robust GDP growth of 2.7% is expected for 2006 as a whole after a pick up in the second quarter.