WE WERE warned it would happen and now it has: inflation is on the rise.

Figures released by the Office for National Statistics have confirmed that inflation as measured by the Consumer Prices Index, which calculates the change in price of a basket of household goods and services, rose from 1.8 per cent in January to 2.3 per cent in February.

Not only did this push the figure above the Bank of England’s target rate of two per cent but it exceeded the 2.2 per cent that commentators had been predicting.

While rising energy prices have had an impact, the main reason for the sharp rise, according to Azad Zangana, senior European Economist at asset manager Schroders, is that the “impact from the fall in the pound [following the Brexit vote] is starting to feed through to import price inflation”.

"UK consumer price inflation has jumped to its highest rate since September 2013 as the fall in the pound since the Brexit referendum has started to push prices of imported goods up,” he said.

On top of that, said Maike Currie, investment director for personal investing at Fidelity International, February’s pay growth figure came in at 1.7 per cent, meaning the rise in inflation has caused real wage growth to “turn negative” and hit -0.6 per cent.

“This means our monthly pay cheque is not keeping up with the cost of living,” she said. “If inflation continues to tick up and wage growth remains lacklustre, we will all be getting progressively poorer as each month rolls round.

“This squeeze on the UK consumer is bad news because consumer spending is the backbone of the UK economy.”

At an obvious level the figures mean we all now have a little less to spend. What will be less obvious on a day-to-day basis is that rising inflation means any money we have tucked away has just been further devalued.

“For savers in particular, inflation hitting 2.3 per cent is a particularly painful blow and makes it harder than ever to generate real returns,” said Richard Wazacz of savings platform Octopus Cash.

"Money deposited in the average high street savings account today will already be worth less in real money after both one and two years, but with inflation rising at the current rate, it will be eroding even more quickly.”

Sean McCann, chartered financial planner at NFU Mutual, agreed, noting that “beleaguered savers are being hit in their pockets and hit in their bank accounts”.

“Inflation means the cost of filling up the car or doing the weekly shop will cost more and, thanks to historically low interest rates, money in the bank or building society is being eroded every day,” he added.

For Kate Smith, head of pensions at insurance company Aegon, “people need to think seriously about how to use their savings to outrun the corrosive impact of inflation”.

The problem is finding an account whose interest rate can keep pace with never mind beat that of inflation. According to price-comparison site Gocompare, just six accounts currently offer a rate in excess of 2.3 per cent, all of which are help to buy ISAs, meaning they are only an option for people looking to buy their first home.

At 2.25 per cent the highest rate that can be accessed by all comes from Atom Bank on its five-year fixed saver, although not only is that rate lower than inflation but, as its name suggests, the account requires savers to lock their cash away for a five-year period.

Even Chancellor Philip Hammond’s new NS&I savings bond, which will pay 2.2 per cent on annual savings of up to £3,000 for three years and which he hailed as a boon for hard-pressed savers, will now not keep pace with inflation.

Other options, such as peer-to-peer lending or stocks and shares ISAs, are available, although in return for receiving a higher rate of return savers must accept a higher level of risk.

As Smith at Aegon said: “Stocks and shares have historically kept better pace with inflation, so are an option for those willing to take some risk and diversify their savings from cash.”

Crucially, anyone going down that route must be aware that while they might make a bit of cash, equally they may not get back the full amount they put in.

The silver lining of sorts, according to Zangana at Schorders, is that inflation is not expected to rise too much higher in the coming months and may even come down before the year is out.

“We forecast headline inflation to rise through three per cent in the coming months, before peaking around the end of the summer, and then steadily coming down to around two per cent over 2018,” he said.