The spectre of another interest rate rise loomed larger yesterday after inflation unexpectedly remained steady last month.

Economists said the Bank of England was likely to adopt a more hawkish approach to inflation and rates after Consumer Prices Index (CPI) inflation stayed at 1.6 per cent.

The figures confounded experts' predictions that heavy price cutting in the January sales would lead to a 0.1 per cent fall to 1.5 per cent - the first fall in four months.

The Office for National Statistics said larger cuts in clothing and shoe prices than last year, as well as falling petrol and diesel prices, had put downward pressure on inflation.

Yesterday's figures mean CPI inflation has been below 1.6 per cent since December 2002, but remains at its highest since June last year.

The underlying rate of Retail Price Index (RPI) inflation, which excludes mortgage interest payments, grew at 2.1 per cent last month, down from 2.5 per cent in December.

The headline rate, which includes mortgage costs, was also down, standing at 3.2 per cent against 3.5 per cent the previous month