ANNUAL UK inflation jumped unexpectedly in August to its highest since February, fuelled by motor fuel and package holiday prices, official figures show.

The Office for National Statistics said yesterday that annual UK consumer prices index inflation had risen from 2.5 per cent in July to 2.7% in August. Economists had forecast a fall to 2.4%. Annual CPI inflation was 2.4% in June.

Liz Cameron, chief executive of Scottish Chambers of Commerce, said: “Although the inflation increase for July had been widely expected by economists, this subsequent rise in August had not been predicted, and many economists were expecting the CPI rate to drop to around 2.4%. This unexpected rise means that wage growth has once again remained relatively flat, impacting on the spending power of UK consumers.”

She added: “These figures highlight the importance of the UK Government negotiating a pragmatic deal urgently for the UK’s future relationship with the European Union.”

The ONS said prices in the recreation and culture category were, in August, up by 3.6% on a year earlier. It noted this was the highest 12-month inflation rate in this category since January 2010, when it was also 3.6%.

It added: “Within this category, the contribution came from a wide range of goods and services, with the single largest contribution from package holidays.”

The ONS noted prices in the transport category in August were up by 6% on the same month of last year, observing the biggest contribution continued to come from motor fuels.

Howard Archer, chief economic adviser to the EY ITEM Club think-tank, noted prices in the recreation and culture category were “volatile” and flagged a belief that this effect would “unwind” in the September inflation figures.

Contemplating the outlook, he added: “Inflation is likely to remain sticky for the remainder of the year, as the impact of a higher oil price, previously announced rises in domestic energy prices and renewed sterling weakness feed through. But with underlying pressures soft and some powerful downward base effects set to come into play, we think that inflation will progressively slow as we move into 2019.”

He declared that, “with inflation likely to drop back as we move through next year”, the EY ITEM Club continued to expect a maximum of one quarter-point rise in UK base rates in 2019. Base rates are at 0.75%.