There has been a bigger-than-expected jump in the rate of inflation, to 2.9% last month, aided by a Brexit-related leap in clothing costs.
According to figures from the Office for National Statistics (ONS), fashion costs rose at an annual rate of 4.6% in August.
It attributed the increase to the fall in the value of the pound since the EU referendum which has forced up prices for imported goods – costs which are evidently being passed on to shoppers at a time they can least afford them.
Mike Prestwood, head of inflation at the ONS, said: “Clothing prices rising faster than last year, along with a hike in the cost of petrol, helped nudge inflation upwards.
“Conversely, these effects were partially offset by airfares, which rose more slowly than during last year’s summer holidays.”
The headline inflation figure of 2.9% represented an increase from 2.6% in the previous month and was higher than most forecasters had predicted.
The data helped sterling to its highest level against the dollar for almost a year – trading at $1.3267 – while it also surged against the euro.
The strengthening of the pound can be explained by greater market expectations of an interest rate rise to tackle higher inflation.
A number of policymakers at the Bank of England have declared concerns in recent months about the impact of rising prices on the economy.
The Bank’s monetary policy committee (MPC) is due to make its latest decision on rates following a meeting on Thursday.
Members will also have taken note of separate figures from the ONS about factory gate costs, which give a future indicator of inflation.
They showed an annual rate of 3.4% – their first increase since February – while prices paid by factories for materials and energy were up 7.4%.
Commenting on the figures, Neil Wilson, senior market analyst at ETX Capital, said: “The inflation data builds a stronger case for the Bank of England to look at hiking rates but it is not yet strong enough for the MPC to act this week.
“Andy Haldane may now choose to vote for a hike, suggesting a 6-3 split on the MPC is now more likely than before with confirmed hawks Ian McCafferty and Michael Saunders likely to vote for a hike.”
There was political reaction too.
TUC general secretary Frances O’Grady said: “The cost of living squeeze continues, with rising inflation outpacing wages.
“The Government needs to get a grip and get pay rising across the economy. A good start would be to scrap the pay cap for all public sector workers.
“Our dedicated public servants are a team. A pick and mix approach, that rewards some and not others, would be cynical and plain unfair.”