The Consumer Price Index rate of inflation remained at 0.6 per cent in the year to August, according to the Office for National Statistics.

The ONS said the figure, which is unchanged from July, is still relatively low in the historic context although it is above the rates experienced in 2015 and early 2016.

It said the main upward contributors to change in the rate were rising food prices and air fares, and a smaller fall in the price of motor fuels than a year ago. These upward pressures were offset by falls in hotel accommodation prices, in addition to smaller rises in the prices of alcohol, and clothing and footwear than a year ago.

Commenting on the statistic, Hargreaves Lansdown senior economist Ben Brettell said economists had been expecting inflation to rise for the third consecutive month, as retailers passed rising import costs on to consumers.

“As yet the effect of the weaker pound on consumer prices appears muted. Input prices faced by manufacturers rose 7.6 per cent in the year to August 2016, compared with 4.1 per cent a month earlier. This is the fastest rate since 2011. The ONS said this was largely due to a large fall in the index 12 months ago (driven by a plunge in crude oil), rather than the recent drop in sterling, but nevertheless it is clear businesses importing materials from abroad are facing significantly higher costs."

He said the effect of sterling’s depreciation will take time to feed through to fully into the figures.

“Forecasts suggests the drop in sterling will ultimately add around five percentage points to the Consumer Prices Index, but it’s as yet unclear whether that will come via a gradual uptick in the inflation rate over a couple of years, or a shorter, sharper bout of inflation over the coming months. The Bank of England forecasts consumer price inflation will hit 2 per cent this time next year,” he explained.

“Recent economic data releases suggest the economy is holding up well despite the vote to leave the EU. The picture will become slightly clearer this week with labour market statistics due out tomorrow, followed by retail sales data on Thursday, when the Bank of England is also expected to leave monetary policy unchanged.”

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