LONDON, July 16 (Xinhua) -- There was a mixed reaction Tuesday, among economists after figures showed inflation reaching a 14-month high in June.

The rise in CPI inflation for June to 2.9 percent against 2.7 percent in May is a setback after a recent series of encouraging data which pointed to a recovery in economic activity led by the dominant services sector, according to some economists.

David Kern, chief economist at industry body the British Chambers of Commerce (BCC) said, "The rise in inflation is bad news for businesses and consumers, especially at a time when earnings growth remains weak and the government's austerity measures are in full swing."

Kern said inflation was now at the highest point seen over the past year, though still below the levels seen in 2010-11.

Kern said there was uncertainty over whether inflation will peak at its present level before falling later this year, although that is what he expected.

"If this happens, it is still possible that the recovery will continue to slowly gather momentum throughout the year and into 2014," Kern said.

He added, "However if unexpected developments, such as renewed surges in energy prices, push inflation up further, our growth prospects will face new risks."

Kern said that given the uncertainties, the Bank of England Monetary Policy Committee (BOE MPC) should remain cautious and reject any measures that could delay a fall in inflation.

However, despite the rise to 2.9 percent, the CPI figure for Q2 2013 averaged 2.67 percent which was significantly below the 2.9 percent which the BOE had forecast in its May quarterly inflation report.

Howard Archer, chief European and UK economist with IHS Global Insight, said that June's 2.9 percent was driven by higher petrol, clothing and footwear prices.

These pressures were offset by lower prices for food and air transport.

Archer warned of the dangers to recovery posed by higher inflation, "The squeeze on consumer purchasing power remains appreciable given that inflation is running at more than three times underlying annual average earnings growth of 0.9 percent in the three months to April."

He added, "This highlights the fact that there remains a very real risk that muted consumer spending could limit growth over the coming months, although elevated employment and recent improved confidence are positives for personal expenditure."

Archer said he thought June was unlikely to mark the peak in inflation.

He said, "We expect inflation to climb a little higher over the summer to peak around 3.1 percent and then to start coming down gradually from the fourth quarter. However, much will depend on oil prices."

The rise in inflation would not be likely to push the BOE to extend the Quantitative Easing (QE) program in the near term.

Archer said, "We suspect that more QE will only occur should the economy suffer a renewed loss of momentum over the coming months. More QE could also occur if gilt yields rise further." INFLATION FORECAST TO FALL

Deutsche Bank UK chief economist George Buckley said the rise to 2.9 percent was lower than Deutsche Bank had forecast.

Buckley said he expected this to be a peak, with inflation moderating on the back of low pay-growth, the base effect of high oil prices in the summer of 2012, and some spare capacity in the economy.

In addition, Buckley said recent data showed shop price inflation falling, and there was a general global weakening in inflation alongside an expectation for weaker upstream prices.

Buckley said, "This point on weaker upstream prices was also borne out in today's data. Headline output prices rose by just 0.1 percent m-o-m in June, following an unchanged reading in May and a fall in April."

Buckley added, "Core output prices were flat on the month. Over the past three months, headline output prices are down a cumulative 0.2 percent while core are up only 0.1 percent."

Upstream and consumer price inflation (CPI) were closely linked, said Buckley, pointing to a coming fall in inflation.