Food and transport costs help push inflation to five-year high

Inflation surged to a five-year high in September as rising food and transport costs upped the financial pressure on households.

Figures from the Office for National Statistics (ONS) showed the Consumer Price Index (CPI) measure of inflation rose to 3% last month, up from 2.9% in August and in line with expectations.

It matches the level in April 2012, with the rate last higher in March that year when it reached 3.5%.

Households have been feeling the pinch as the Brexit-hit pound bumps up everyday prices and wage growth tracks behind inflation.

ONS head of inflation Mike Prestwood said: "Food prices and a range of transport costs helped push up inflation in September.

"These effects were partly offset by clothing prices that rose less strongly than this time last year."

The jump in CPI leaves Bank of England Governor Mark Carney on the brink of having to write a letter to Chancellor Philip Hammond explaining why inflation is rising so rapidly.

The Government has set an inflation target of 2%, with protocol dictating that Mr Carney must contact the Chancellor if inflation exceeds 3% or falls short of 1%.

It came as the Retail Price Index (RPI), which is used to set next year's business rates, was unchanged last month at 3.9%.

Despite coming in shy of expectations, the rate still ensures businesses face a hefty tax hike in 2018 on top of the £23.9 billion the Government is expected to haul in from English firms this year.

Focusing on CPI, the ONS said food and non-alcoholic drinks rose by 0.8% month-on-month in September after falling by 0.1% over the same period last year.

On an annual basis, prices rose by 3% last month, its highest level since October 2013 when it climbed by 3.9%.

Transport costs also put upward pressure on the headline rate in September after recording a smaller month-on-month fall of 1.3% in contrast to a drop of 2.3% in 2016.

Fuel prices also pushed higher, with petrol and diesel both stepping up by 2.5p on the month to 118.2p and 120.1p respectively.

The Consumer Price Index, including owner-occupiers' housing costs (CPIH), was 2.8% in September, up from 2.7% in August.

CPIH is the ONS's preferred measure of inflation, which includes costs associated with living in, maintaining and owning a home.