Inflation spiked to a two-year high in September amid rising petrol and clothes prices.
The annual increase hit 1 per cent on the Consumer Price Index (CPI) measure – well above economists’ expectations.
It had been stalled at 0.6 per cent for July and August.
The latest ONS figures for September show CPI inflation rose sharply to 1 per cent
But the Office for National Statistics (ONS) said there were no ‘explicit’ signs that the slump in the pound was to blame.
The rise was driven by prices for clothing, overnight hotel stays and motor fuels, and prices for gas, which were unchanged, having fallen a year ago.
These upward pressures were partially offset by a fall in air fares and food prices.
Last week there was a major row over Unilever trying to hike the prices for products such as Marmite.
The Retail Prices Index (RPI) – a separate measure which includes housing costs – rose to 2 per cent, up from 1.8 per cent in August.
‘CPI inflation has risen to its highest for nearly two years, though it remains low by historic standards. The prices paid by manufacturers for raw materials were unchanged over the month and there is no explicit evidence the lower pound is pushing up the prices of everyday consumer goods,’ the ONS Head of Inflation Mike Prestwood said.
‘ONS will continue to monitor 180,000 prices across the country for signs of devaluation having a wider economic impact than seen so far.’
The main upward pressure on CPI came from a jump in clothing and footwear price tags – especially women’s clothes – with garments rising 6 per cent between August and September, compared a 3.3 per cent rise over the same period last year.
Overall clothing prices rose by 5.5 per cent month-on-month in September.
The ONS said the ‘relatively large’ increase in clothing prices was in line with seasonal trends and not triggered by the drop in the value of the pound following the EU referendum result.
It added that firms had measures in place to protect against short-term changes in the exchange rate.
The cost of living was also impacted by price rises at restaurants and hotels, up 0.7 per cent between August and September compared to 0.2 per cent a year ago.
The ONS figures suggest that the costs of fuel and hotels have been driving CPI inflation, while food costs have been falling
The cost of an overnight stay in a hotel rose month-on-month in contrast to a fall last year.
Petrol prices climbed by 1.2 pence per litre month-on-month to 111.2 pence, while diesel prices increased by 1.5 pence per litre to 113.3 pence over the period.
However, food prices remained under pressure, dropping 0.3 per cent between August and September, compared with a 0.1 per cent rise last year.
Prices at supermarket check-outs have continued to fall as Britain’s Big Four grocers remain engaged in a price war following the rise of German discounters Aldi and Lidl.
The impact of sterling’s fall came into sharp focus last week when Tesco and Unilever became locked in a Mexican stand-off over a potential price hike on key products.
Britain’s biggest supermarket was left grappling with a shortage of store cupboard staples – including Marmite, Pot Noodle and Persil – after reportedly refusing to bow to Unilever’s demands for a 10 per cent price rise following the collapse in sterling.
Unilever later said the dispute had been resolved, but warned that consumers would still have to stomach more pain in the New Year.
A group of former supermarket bosses said on the run to the EU referendum that grocery prices would rocket in the event of Brexit, dealing a devastating blow to the economy.
Fresh warnings were made on Monday, with former deputy prime minister Nick Clegg saying consumers face ‘inevitable’ price rises on food and drink if Britain leaves the single market.
Mr Clegg, who has been appointed Lib Dem EU spokesman by party leader Tim Farron, said that ‘hard Brexit’ – in which the UK leaves the single market and customs union and trades under World Trade Organisation rules – would create ‘turmoil’ in Britain’s food and drink industry.
The ONS said there were no ‘explicit’ signs the fall in the value of sterling had yet made an impact on inflation
He said grocery bills will have to bear the knock-on costs of ‘whopping’ tariffs on imported foods imposed if the UK leaves the European single market, with a 59 per cent levy on beef, 38 per cent on chocolate, 40 per cent on New Zealand lamb and 14 per cent on Chilean wine.
The Bank of England said on Friday that it was willing to allow inflation to run ‘a bit’ higher than its 2 per cent target if it safeguarded jobs and boosted economic growth.
However, think-thank EY Item Club said rising levels of inflation will apply the brakes to economy in the years to come.
Its latest report said inflation is expected to surge to 2.6 per cent next year and 1.8 per cent in 2018, causing consumer spending to slump to 0.5 per cent and 0.9 per cent respectively.
Business investment is also slated to take a hefty knock from uncertainty surrounding Britain’s future trading relationship with the EU, dropping 1.5 per cent this year and more than 2 per cent in 2017.
It said the double whammy impact will cause UK GDP growth to drop sharply to 0.8 per cent next year, before rebounding to 1.4 per cent in 2018.