The Office for National Statistics (ONS) reported that lower fuel prices and slower increases in restaurant costs offset the rise in flight costs. This news comes as the Bank of England is expected to maintain interest rates at 5%.

Separate figures revealed a substantial increase in private rents, rising by 8.4% in the year to August. The current inflation rate slightly exceeds the Bank of England’s 2% target but remains considerably lower than during the peak of the cost-of-living crisis in 2022.

Kevin Brown, savings specialist at Scottish Friendly, commented: “These figures are largely to be expected. The Monetary Policy Committee (MPC) has forecast an increase to 2.75% by the end of the year, so a steady overall rate is not out of character with this, especially with expected energy market price increases coming. But households and businesses will rightly be concerned as to whether increasing prices are under control with core inflation ticking back up to 4.3%, when we’ve just left an extraordinarily volatile period.

“The core inflation rise confirms that for households the pressure is not over, particularly with rising energy bills as we go into winter. That being said, if the increase stays within MPC expectations then the path to lower rates is still in sight.

“We’re likely to see another pause from the MPC tomorrow as it continues to observe the developing situation. Wages are still rising above inflation, but the economy is flatlining. Such a mixed bag warrants caution as clearly we’re not yet out of the woods on inflation.”

Mr Brown continued: “While rising energy prices are largely unavoidable, households are now pretty well versed in the consequences, having weathered serious pressure in the past two years. Having a rainy-day fund, where possible, is essential to meet any unexpected costs. However, as available rates come down, hard-pressed savers will need to consider new avenues for their long-term savings as cash rates tumble.”

Danni Hewson, AJ Bell head of financial analysis, added: “Volatility in pricing for things like airfares is less troubling than the stickiness evident in the core data. Chunky pay rises dolled out across the service sector have to be paid for somehow and although the headline number has come in as expected today’s data has cooled market expectation of a second rate cut before November, with just over a quarter now entertaining a September cut.

“For the consumer it is an improving picture, especially when it comes to filling up cars or kitchen cupboards.

“August delivered the 17th consecutive month of falling food inflation, although many shoppers are still struggling with the cost of everyday essentials – something which is likely to get more acute as the nights draw in and the heating goes on.

“For homeowners and would-be homeowners a rate hold may not be quite as bad news as they might fear, with lenders already looking ahead into next year when markets are almost fully pricing in a full 1% cut between now and next March.

“What’s clear is the double digit shocks that households endured in 2022 and early 2023 are behind us, but the impact of those shocks still linger with prices rising less quickly rather than falling and wages only beginning to fill in some of the gaps.”