RISING inflation has put the possibility of further interest rate cuts in doubt for the next few months, offering little relief for homeowners struggling to pay their mortgages.

The Consumer Price Index the official measure of inflation, rose to a seven-month high of 2.2 per cent in January, up from 2.1 per cent in December.

But while the nation will shiver at the possibility of a tough 2008, Swindon, with almost 100 per cent full employment, should at least be somewhat protected.

"For the last 30 years here in Swindon we have bucked almost every negative trend when it comes to inflation," said Alan Fletcher, the president of the Swindon Chamber of Commerce, pictured.

"There is no doubt that the economy is in a little bit of trouble at the moment and the Bank of England's first duty is to guard against inflation.

"Much as they would like to cut interest rates to stimulate the economy they can't because battling inflation is the priority.

"But here in Swindon because of the job situation we should be better than most."

The rise in inflation has been brought about because of the increased cost of fuel. Oil rose to $100 a barrel last month.

Higher food prices also added to the inflationary pressures.

Fruit shot up in price, as did, curiously, the price of furniture. Economists said that the figure made further cuts in rates by the Bank of England less likely.

Howard Archer, an economist at Global Insight, said: "We don't expect interest rates to come down again until May."

The Bank of England cut the base rate by a quarter-point to 5.25 per cent last week.

This came on top of a reduction in borrowing costs in December.

Tuesday's inflation indicators will be little comfort to first-time homebuyers, who spent 20.7 per cent of their income servicing their home loan in December, up from 17.9 per cent in the same month of 2006, figures from the Council of Mortgage Lenders showed.

This has been coupled with the threat of a sustained downturn in the housing market when a leading investment bank forecast property prices would fall for the next two years.

Goldman Sachs said it expected house prices to fall by five per cent this year and a further two per cent in 2009. Originally the bank had predicted a decline of three per cent in 2008 and no further change the year after but it became more pessimistic after economic warning signs.

The predictions came as another set of bleak figures showed that first-time buyers were spending the highest proportion of their income on mortgage interest repayments since the recession of the early 1990s.