Inflation hit two-year high in September, official figures due to show
Inflation is expected to jump to a near two-year high when official figures for September are published on Tuesday.
The Consumer Price Index (CPI) measure of inflation is forecast to reach 0.9%, after stalling at 0.6% for July and August.
Pricier petrol and the rising cost of hotel bookings are expected to put upward pressure on the cost of living, with economists pencilling in CPI to hit its highest level since November 2014.
All eyes will be on food prices to see if there are any clear signs that the plunge in the value of the pound since the Brexit vote is feeding through to consumers.
While sterling's drop against the US dollar and the euro is expected to boost exports, the move will also ramp up the cost of imported goods.
The impact of sterling's fall came into sharp focus last week when Tesco and Unilever became locked in a Mexican stand-off over a potential price hike on key products.
Britain's biggest supermarket was left grappling with a shortage of store cupboard staples - including Marmite, Pot Noodle and Persil - after reportedly refusing to bow to Unilever's demands for a 10% price rise following the collapse in sterling.
Unilever later said the dispute had been resolved, but warned that consumers would still have to stomach more pain in the New Year.
A group of former supermarket bosses said on the run to the EU referendum that grocery prices would rocket in the event of Brexit, dealing a devastating blow to the economy.
Fresh warnings were made on Monday, with former deputy prime minister Nick Clegg saying consumers face "inevitable" price rises on food and drink if Britain leaves the single market.
Mr Clegg, who has been appointed Lib Dem EU spokesman by party leader Tim Farron, said that "hard Brexit" - in which the UK leaves the single market and customs union and trades under World Trade Organisation rules - would create "turmoil" in Britain's food and drink industry.
He said grocery bills will have to bear the knock-on costs of "whopping" tariffs on imported foods imposed if the UK leaves the European single market, with a 59% levy on beef, 38% on chocolate, 40% on New Zealand lamb and 14% on Chilean wine.
The Bank of England said on Friday that it was willing to allow inflation to run "a bit" higher than its 2% target if it safeguarded jobs and boosted economic growth.
However, think-thank EY Item Club said rising levels of inflation will apply the brakes to economy in the years to come.
Its latest report said inflation is expected to surge to 2.6% next year and 1.8% in 2018, causing consumer spending to slump to 0.5% and 0.9% respectively.
Business investment is also slated to take a hefty knock from uncertainty surrounding Britain's future trading relationship with the EU, dropping 1.5% this year and more than 2% in 2017.
It said the double whammy impact will cause UK GDP growth to drop sharply to 0.8% next year, before rebounding to 1.4% in 2018.
Kathleen Brooks, research director at City Index, said rising prices could put the squeeze on the profitability of the Big Four grocers.
"Tesco may absorb price increases rather than pass them on to their customers, which could further squeeze Tesco's margins, and may impact the future profitability of the firm.
"Since profits are a key driver of share prices, signs that firms are struggling with rising inflation could weigh on the FTSE.
She added: "We think that the risk is for an upside surprise, and annual CPI could breach the 1% mark for September, while the market expects a reading of 0.9%.
"If prices rise as we expect, then the (Bank's) Monetary Policy Committee's 2% inflation target (is likely) to be breached at some point in first quarter of 2017."