Inflation rises to 2.5% after three-month plateau: ONS

CPIH, which the ONS uses as its headline measure and which includes owner occupiers’ housing costs, was 2.3% in July 2018, unchanged from the previous month.

Rising prices for computer games and transport fares produced the largest upward contributions to change in the 12-month rate between June and July 2018.

Kate Smith, head of pensions at Aegon, commented: “Today’s figure of 2.5% confirms an unwelcome return of rising inflation, marking the 18th month in row that inflation has exceeded the Government’s target of 2%, and diminishing the overall spending power of households.

“There’s little comfort to be had for savers, who may have expected a welcome boost in their savings rate following the recent hike in the Bank of England base rate. However, with many banks and building societies failing to pass on the rate rise in full, many will be earning a lower rate of return than inflation, effectively losing money.

“Now is the time for those people to think long term and make their money work harder. Doing this boosts people’s savings, protects them against the ravages of inflation and helps savings last longer.”