A Yorkshire business leader has warned that the latest inflation figures could spark a rise in interest rates.

Margaret Wood, chairman of the Institute of Directors in Yorkshire, cited speculators who were pushing up the price of commodities and creating a problem which regulators could not control.

Mrs Wood, managing director of West Yorkshire window systems firm ICW, said: “The two biggest drivers of inflation have been the increase in the rate of VAT in January and the cost of fuel.

“The true figure of inflation was not clear but it is obviously impacting on consumer and customer spending in all fields.

“The regulators should turn their attention to areas they can affect such as the energy surcharge tax and act to tackle that before it affects further confidence in the recovery.

“Inflation is impacting very seriously on business, particularly small businesses.

“If the Government is to ensure that it has the support of the private sector there needs to be an awareness of the impact inflation is having on the market place.

“The private sector is a key area and the one that will continue to drive the recovery.”