HIGHER petrol and house prices were today set to push the underlying rate of inflation further beyond the Government's 2.5 per cent target.

Economists expect the figure for February to rise as high as 2.9 per cent from the unchanged mark of 2.7 per cent reported a month earlier.

Uncertainty over Iraq has kept the price of crude oil near to the 30 US dollars a barrel mark, while house price growth has shown little sign of easing.

David Page, economist at Investec Bank, said: "In the short-term we continue to see risks of inflation rising above 3 per cent as firm house price increases combine with higher oil prices.

"However, both factors should prove temporary and weak growth, particularly if this infects the high street, should see inflation return to target and below in 2004."

The figure for headline inflation, which includes mortgage interest payments, is currently at 2.9 per cent but could also edge up to 3per cent today.

After several months below target, underlying inflation has now been above its 2.5 per cent target for three months in a row.

Today's figures will be the first to feature the new basket of items used by the Office for National Statistics to calculate UK inflation.

Newcomers to the 650-strong selection of items and services include takeaway caffe latte, golf course green fees and dried potted snacks.

Tinned spaghetti, brown ale and vinyl floor coverings have been ejected.