Inflation rose 0.3 per cent in August, according to a new report released by the Office for National Statistics (ONS).
It showed that the consumer prices index annual inflation rate increased to 4.7 per cent, up from 4.4 per cent in July.
The figures highlighted the rising cost of living, which could lead to more debt for struggling households.
Electricity prices have risen by 18 per cent compared to last year and gas inflation reached levels of 27.7 per cent – which could have been partly caused by two big energy companies increasing their prices over the summer.
Food inflation continued its upward tend, attaining a record 14.5 per cent which the ONS attributed to higher costs for cereals and breads.
As a result of the figures being released the governor of the Bank of England, Mervyn King, has written an open letter to the chancellor outlining several reasons why inflation is over the target level of two per cent.
By Jamie Price