FEARS over under-pressure household finances intensified yesterday after official figures showed a sharper-than-expected leap in annual UK inflation, with Scottish Chambers of Commerce urging the Bank of England to hold benchmark interest rates.

Annual UK consumer prices index inflation jumped from 2.6 per cent in July to 2.9 per cent in August, figures published yesterday by the Office for National Statistics showed. Economists had forecast annual inflation of 2.8 per cent for August, and the latest rate remains well above the two per cent target of the Bank, which will announce its next decision on rates tomorrow.

Clothing and footwear prices in August were up by a record

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4.6 per cent on a year earlier, following a 2.4 per cent month-on-month jump.

The ONS said: “The rise in inflation in this category may reflect changes in the exchange rate impacting on the cost of imported clothing.”

The pound’s tumble in the wake of the Brexit vote has made imports much more expensive for UK consumers.

Petrol prices rose 1.8p-a-litre on average between July and August. This contrasted with a 1.8p-a-litre fall between the same two months of last year.

Liz Cameron, chief executive of Scottish Chambers, noted

the “import-intensive nature of clothing and footwear”, with exchange rate pressure through the supply chain “driving the increase” in prices.

Ms Cameron said: “Prices at the factory gate are increasing and with CPI inflation continuing to outpace pay increases, this will raise some concerns for businesses when it comes to the availability of consumer spending. We are hearing early signs from members, although not widespread, of increasing costs being passed down the supply chain and potentially to the end consumer.”

She added: “With this in mind, and with only modest GDP (gross domestic product) growth, the Bank of England should hold steady on raising interest rates.”

Anna Leach, head of economic intelligence at the Confederation of British Industry, said the

inflation figures “highlight the pressure on consumers from rising prices against the backdrop of sluggish wage growth”.

Howard Archer, chief economic adviser to the EY ITEM Club think-tank, said: “Higher inflation in August is bad news for both the Bank of England and consumers.”

Annual inflation on the old all-items retail prices index measure rose from 3.6 per cent in July to 3.9 per cent in August.