The Bank of England has kept interest rates on hold - but warned a rise is "likely" in the "coming months" if inflation continues to surge.
Minutes of the latest meeting of the monetary policy committee (MPC) showed a 7-2 vote in favour of no change this month - keeping rates at their post-Brexit low of 0.25%.
It was being closely watched as the decision was made just days after the Office for National Statistics revealed a leap in consumer price inflation to 2.9% last month from an annual rate of 2.6% in July.
The Bank has been growing increasingly wary about the threat posed to the economy from higher prices - with inflation above its 2% target.
However, the MPC minutes also tempered expectations of a possible interest rate rise by saying it would depend not only on inflation rising further but also the economy maintaining its recent strength.
Other data this week pointed to the lowest jobless rate since 1975 though wage growth remained stubbornly slow at 2.1%.
When the inflation figure of 2.9% is taken into account it means the squeeze on family budgets is intensifying.
Prices have risen because import costs were raised by the post-Brexit vote collapse in sterling's value.
The currency gained more than a cent against the dollar - back above $1.33 to fresh one-year highs - after the MPC's rate deliberations came to light.
It also rallied against the euro, trading back below the €0.89 mark, leaving the pound on track for its best week against the single currency in 10 months.
The shifts hit the market values of multi-nationals, especially dollar-earners, on the FTSE 100 which was 1.14% lower at 7295 points.
In signalling a growing lack of tolerance for rising prices, the MPC said: " A majority of MPC members judge that, if the economy continues to follow a path consistent with the prospect of a continued erosion of slack and a gradual rise in underlying inflationary pressure then, with the further lessening in the trade-off that this would imply, some withdrawal of monetary stimulus is likely to be appropriate over the coming months in order to return inflation sustainably to target.
"All members agree that any prospective increases in Bank Rate would be expected to be at a gradual pace and to a limited extent."
Commenting during an event launching the new £10 bank note, Bank of England Governor Mark Carney said: "We've all seen that prices are going up in the shops and that's been entirely the result of the fall in the value of sterling, which is due to Brexit.
"What the Bank has been doing since the referendum has been looking to balance support for the economy, as the economy adjusts to the prospect of Brexit, with our ultimate objective, which is to bring inflation back to that 2% target to make sure that the value of these notes and other notes stays stable.
"What you heard today is that the majority of the member of the committee, myself included, see that that balancing act is beginning to shift and that, in order to keep inflation or return inflation to that 2% target in a sustainable manner, there may need to be some adjustment of interest rates in the coming months.
"We'll take that decision based on the data but, yes, that possibility has definitely increased."
Ben Brettell, senior economist at Hargreaves Lansdown, reacted: "To me, leaving rates where they are makes a great deal of sense.
"Throw a hefty dose of Brexit-related uncertainty into the mix and it's easy to see why the majority of policymakers see higher rates as an unjustified risk at this stage."