The rise in inflation is not the only worrying sign that the UK economy is not in good shape.

Official figures show the recovery from the massive drop in economic production caused by the pandemic sharply slowed earlier this year.

Total output grew 1.3 per cent in the third quarter of the year, lower than the 1.5 per cent analysts had forecast and down from 5.5 per cent in the previous three months.

The slowdown means gross domestic product – a measure of all the goods and services produced – remained 2.1 per cent smaller between July and September than it was before the pandemic.

Growth picked up to 0.6 per cent in September – slightly faster than the consensus forecast. However, 0.5 percentage points of that were attributed to the health sector and represented an increase in face-to-face GP appointments.

Many global investors expected the Bank of England to raise interest rates from their current record lows of 0.1 per cent, in a bid to clamp down on soaring inflation, at their last monetary policy meeting earlier this month.

But instead the committee which sets the base rate decided to hold it at its current position, angering some who believed the Bank’s governor, Andrew Bailey, had dropped hints earlier the rate would be raised.

Putting interest rates up is seen as a way to control inflation but Mr Bailey said current rises in prices were caused by global factors outside of the Bank’s control.

“Raising interest rates won’t produce more gas, [and] it won’t produce more semi-conductor chips,” he said.

“Where we have to use interest rates is where we see the potential for demand to rise or the potential for wage pressures to come into play, which can be self-perpetuating and we will do that.”

The Bank’s remit is to keep the rate of inflation to between two per cent and three per cent. Its latest forecast is that inflation will hit five per cent in April before falling back.

The next monetary policy committee meeting when raising the interest rate will be discussed is due on 16 December.

The price of buying diesel fuel has topped 150p a litre for the first ever time, underlining the broad inflation in prices seen across the British economy at present.

The average price on Sunday was 150.09p, after hitting a high of 150.5p the day before, the AA said.

Petrol prices also rose to a new record level, of 146.53p per litre on Sunday. The cost of filling a typical 55-litre family car with petrol or diesel has increased by around £18 over the past year.

The government at the recent Budget froze fuel duty, despite concerns this would undermine efforts to cut carbon emissions, in a bid to keep fuel prices down.

Fuel prices has soared over the past year as a result of rising costs in buying crude oil, as well as the economy restarting after the pandemic lockdowns.

The AA also said the weakness of the pound in global markets was contributing to the problem, which was likely to fuel further inflation as businesses forced to pay more to move goods around passed on these higher costs to consumers via price rices.

Britons should not fear rising inflation will lead to a “1970s-style” economic crisis because households simply do not have enough money to spend on increasingly expensive everyday goods, the Bank of England’s policymakers have said.

Despite inflation hitting its highest rate since December 2011, the wage increases are being eaten up by the soaring cost of essential products, meaning no “wage-price spiral” – which afflicted Britain in the 1970s – will take place.

Three of the Bank’s most senior figures told MPs on the Treasury Select Committee that such a scenario – which played out in the late 1970s – was not likely today because of the radically different market conditions, vastly less powerful trade union sector, and the fact the inflation is being driven by global issues.

“There is no risk of a wage-price spiral in the UK,” said Michael Saunders, an external member of the Bank’s nine-person interest rate-setting committee. “Talk of a return to the 70s is completely misplaced.”

Inflation in Britain has soared to 4.2 per cent, the highest rate for a decade, the Office for National Statistics has reported.

The Consumer Prices Index leapt sharply by more than a percentage point in just one month, rising from 3.1 per cent in September to 4.2 per cent in October.

The bigger-than-expected rise was driven by surges in energy bills, fuel prices, and higher prices in restaurants and hotels.

Goods made in factories and raw materials also saw similar price rises as supply chain disruption takes its toll.