Interest rates could rise early next year and at a much faster rate than previously seen, according to one economist at a City fund manager.

Simon Ward of Henderson New Star claims that the Bank of England base rate of interest, currently at an all-time low of 0.5%, will increase early next year and that the rate of increase is likely to be higher than normal, with inflation likely to increase quickly following the government’s quantitative easing strategy.

As expected, inflation figures officially dropped in October thanks to falling oil, transport and food costs.

The Consumer Prices Index (CPI) measure, which hit 5.2% in September, dropped to 4.5% - the biggest month-to-month drop in 16 years.

The Retail Prices Index, (RPI) the alternative measure of inflation, which includes housing costs, fell from 5% to 4.2%, the biggest fall since 2003.