The rate of inflation remained unchanged in July at 2.6%, led by a drop in fuel prices.
It means the Consumer Price Index measure of inflation (CPI) remains above the Bank of England’s inflation target of 2% – but is below economists’ predictions of 2.7%.
Despite this, the rate of Retail Price Index (RPI) inflation, which is used to set rail season ticket prices, rose to 3.6%, the Office for National Statistics said.
Rail unions slammed the prospect of the highest increase in fares in five years as a “kick in the teeth” and reignited their calls for the industry to be renationalised.
However, Paul Plummer, chief executive of the Rail Delivery Group, said: “Money from fares pays to run and improve the railway.”
CPI measures the growth in price of every day items including fuel, food, clothing and household goods.
Inflation has been accelerating largely thanks to the collapse in the pound following the Brexit vote, which makes imported goods more expensive.
The ONS said the main downward pressure last month came from a fall in fuel prices. Petrol fell by 1.4p month on month to 113.9p per litre, while diesel slipped by 1.7p to 115.6p per litre.
The decline was countered by increased food, clothing and electricity prices – following hikes by major energy suppliers.
James Tucker, ONS head of consumer price inflation, said: “Falling fuel prices offset by the costs of food, clothing and household goods left the headline rate of inflation unchanged in July.”
The figures are significant as they show a continuation in the squeeze on living costs as the pressure remains on the Bank of England to raise interest rates to combat rising prices.
Sky’s Economics Editor Ed Conway said the fact the rate held steady was “a little bit of a surprise”.
“But nonetheless, people are facing increases to their wages at a rate of about 2% and inflation is above that. It means that that squeeze on living standards – inflation running at a higher rate than earnings – is starting to dig into people’s salaries and we are starting to see a fall in their standard of living,” he added.
A Treasury spokesman said: “Although inflation is likely to start falling next year, we understand some families are concerned today about the cost of living. That is why we have given the lowest paid a pay rise through the National Living Wage and are cutting taxes for 31 million people.”
Sterling dipped on the latest CPI news, trading 0.3% lower against the dollar at 1.29 and 0.1% lower against the euro at 1.09.