The Bank of England’s new chief economist has said that UK inflation could go above 5% next year.

Huw Pill told The Financial Times: “I would not be shocked — let’s put it that way — if we see an inflation print close to or above 5%. And that’s a very uncomfortable place for a central bank with an inflation target of 2% to be.”

This September saw inflation dip to 3.1% – down from 3.2% in August. According to the Office for National Statistics, the rise in petrol prices and transport were the biggest contributors.

Mike Hardie, head of prices at the ONS, commented: “However, this was partially offset by most other categories, including price rises for furniture and household goods and food prices falling more slowly than this time last year.”

“The costs of goods produced by factories rose again, with metals and machinery showing a notable price rise. Road freight costs for UK businesses also continued to rise across the summer.”

The increased demand for domestic holidays has meant Intercontinental Hotels Group is seeing an increase in bookings.

The owner of The Crown Plaza and Holiday Inn reported a 66% increase in revenues for Q3, which is 21% behind pre-pandemic levels.

“Domestic leisure demand was particularly strong in a number of markets over the summer, where occupancy and rate climbed back to 2019 levels,” said chief executive, Keith Barr.

Commenting on the results, AJ Bell financial analyst Danni Hewson, said: “The pandemic had an outsized impact on the hotels sector and InterContinental Hotels was no exception. Today’s update confirms a recovering picture with the company gradually clawing its way back to its pre-pandemic levels of trading.

“Its various franchises, including Holiday Inn and Crowne Plaza, have been boosted of late by domestic leisure travel, as people holidayed at home rather than jetted off overseas. This trend was particularly notable in the US where the gap between pre-Covid and post-Covid trading is narrowest.

“The group’s commitment to growth is notable but it is taking a refined approach, rather than chasing growth blindly, with the business also exiting a large number of hotels and committing to the improvement of others.”

On the news, shares dipped 2% to 4,883p.

Retail sales were down by 0.2% in September, according to the latest numbers from the Office of National Statistics.

Despite the ending of almost all lockdown restrictions, retail sales volumes have fallen every month since April. Clothing and department stores saw a slight increase but it was Household goods stores that reported a 10% fall in sales. Sales at chemists and toy stores also fell.

“An unexpected fall in retail sales, which came despite a boost from rising fuel prices, demonstrating that things are getting tougher out there,” said AJ Bell financial analyst Danni Hewson.

Helen Dickinson, the chief executive of the British Retail Consortium, commented: “For the sake of the UK’s economic recovery, it is vital that retail sales bounce back as we near the festive season.”

“Labour shortages across the supply chains, on farms, factories, warehouses and lorry drivers, all threaten to derail this recovery and it is vital that government finds a long-term solution to this problem,” she added.