UK inflation is at its highest level for almost two years after the Office of National Statistics announced the Consumer Prices Index rose to 0.6% in the year to July.

During July the CPI recorded a 0.1 percentage point increase from the 0.5% in the year to June 2016.

Although a small increase, the CPI figure of 0.6% is the highest level since November 2014 after a period of low inflation amid falling oil prices and low food costs.

The main driver of this increase was the rising price of petrol – with transport costs adding 0.06 percentage points to the overall CPI total last month having acted as a drag of 0.3 percentage points during the same month last year.

Additionally, inflation was driven by price rises in alcoholic drinks, accommodation and a lower fall in food prices than a year ago.

A year ago food prices contributing a 0.3 percentage point drag on deflation, which eased to 0.27 percentage points last month.

These upward pressures were partially offset by falls in social housing rent, and falling prices for certain games and toys.

The RPIJ - an improved variant of the Retail Prices Index (RPI) to meet international standards - stood at 1.1% in July, up from 0.9% in June.

The original RPI 12-month rate for July 2016 stood at 1.9%.

Shore Capital suggested the data supports a thesis that living standards are likely to be squeezed in 2017 “unless policy measures defy some gravitational forces”.

“We would expect UK consumer confidence to seep back upwards in the forthcoming months after the Referendum habitus albeit there are clearly plenty of twists and turns to be confronted.

“More clement current weather and the marvellous British Olympians may add a little bit of a short-term boost too albeit the substantive outcome for household expenditure will, of course, be employment levels, wages & salaries and consumer prices; and so living standards.”