Higher energy prices drove UK inflation higher in August, with transport costs exerting the biggest upward force on the headline CPI. Road fuel prices rose 13 per cent between July and August, while air travel prices increased 6.2 per cent on a monthly basis. Transport costs rose 1.5 per cent monthly, contributing 0.15 percentage points to the 2 percentage point increase in the monthly rate.

The figures reinforce governor Andrew Bailey's argument that there are few signs yet of UK inflation becoming persistent. Food prices, by contrast, were only 1.1 per cent higher year on year. UK prices rose 0.5 per cent between July and August overall.

Rates are likely to be held at 3.75 per cent when the Bank of England meets Thursday, but further increases in oil prices in recent days mean the risks of waiting are rising. Without an imminent fall in energy prices, the BoE is expected to raise rates before the end of the year to offset any rise in inflation expectations.