UK inflation remains at 3.8% but food price rises accelerate for another month

The rate of Consumer Prices Index was 3.8% in August, the same as July, the Office for National Statistics said.

This was the level that most economists had been expecting, but remains at nearly double the Bank of England's target and ends hopes of an interest rate cut later this week.

Food and drink inflation rose to 5.1% in August, from 4.9% in July, as shoppers continued to face higher prices for items at the till.

It marks the fifth month in a row that the rate has increased and the first time it has nudged above 5 per cent in 18 months.

It reads as more bad news for Chancellor Rachel Reeves, who has been warned she will have to find an additional £9 billion in her upcoming budget due to downgrades in productivity.

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The economic picture is likely to be worsened when the Office for Budget Responsibility slashes UK productivity forecasts – output per worker.

Despite this, Ms Reeves will be pleased to see core inflation - excluding energy, food, alcohol and tobacco - did ease slightly in August.

ONS chief economist Grant Fitzner said: “The cost of airfares was the main downward driver this month with prices rising less than a year ago following the large increase in July linked to the timing of the summer holidays.

“This was offset by a rise in prices at the pump and the cost of hotel accommodation falling less than this time last year.

“Food price inflation climbed for the fifth consecutive month, with small increases seen across a range of vegetables, cheese and fish items.”

Ms Reeves said: “I know families are finding it tough and that for many the economy feels stuck. That’s why I’m determined to bring costs down and support people who are facing higher bills.”

She said the Government was taking action “to put more money in people’s pockets while we work to build a stronger, more stable economy that rewards hard work”.