The Consumer Price Index rate of inflation has increased to 2.1 per cent over July, rising above the Bank of England’s 2 per cent target for the first time since April.

Figures published by the Office for National Statistics revealed that CPI climbed from 2 per cent to 2.1 per cent over July. In addition, the Consumer Prices Index including owner occupiers’ housing cost also increased from 1.9 per cent in June to 2 per cent in July.

The ONS said that between June and July, there were large upward contributions to the change in the CPIH 12-month rate from games, toys and hobbies, and accommodation services, where prices for both rose by more than a year ago, and from clothing and footwear, and other financial services.

There were offsetting downward contributions to change coming from transport services and, to a lesser extent, from domestic fuels principally electricity and gas.

Commenting, Aegon pensions director, Steven Cameron, said: “The latest inflation rate of 2.1 per cent pushes it above the Bank of England’s 2 per cent target for the first time since April and as the scheduled Brexit day fast approaches, is a timely reminder of the potential for prices of goods and services to rise faster in future.

“Fortunately, yesterday’s figures from DWP also show a continued strong labour market, so working households are in a relatively good position to plan ahead and save for the future, especially if earnings increases continue to outstrip price inflation. However, it’s fixed income pensioner households who are at greatest risks of accelerated price inflation.

“Those in retirement also spend their money on different things and if a disproportionate amount of their income is spent on the items that rise fastest, the effective pensioner inflation rate could be higher than that of workers. Anyone about to enter retirement needs to build this into their planning to maintain their standard of living whatever the rate of future price inflation.”

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