INFLATION rose last month to its highest level since September 2013 to stand at 2.7 per cent — up from 2.3 per cent in March — and above the Bank of England’s two per cent target, official figures show.

The Office for National Statistics (ONS) said the main reason was higher air fares, which rose because of the later date of Easter this year compared with 2016.

Rising prices for clothing, vehicle excise duty and electricity also played a part, but a fall in the price of petrol and diesel slightly offset this.

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The Bank of England last week warned that inflation as measured by the Consumer Prices Index (CPI) would peak at just below three per cent this year.

It also warned that 2017 would be “a more challenging time for British households” with inflation rising and real wages falling — leading to a consumer spending squeeze. Pay — including bonuses — increased at an annual rate of 2.3 per cent in the three months to February, said to the ONS. The latest figures on earnings growth are due out today.

The ONS said the cost of air travel rose by 18.6 per cent from the month before, with Easter falling on April 16 this year compared with March 27 last year.

Clothing costs jumped to their highest level for six years, with a rise of 1.1 per cent between March and April. Electricity and food prices were also up, but there were falls in the cost of gas, petrol and diesel. The Retail Prices Index (RPI), a separate measure of inflation which includes council tax and mortgage interest payments, reached 3.5 per cent last month, up from 3.1 per cent in March.

Business group Scottish Chambers of Commerce (SCC) said the figures confirmed long-held expectations and highlighted growing concerns over the capacity for businesses to contain rising costs and the potential threat to consumer demand, as disposable incomes become squeezed.

Liz Cameron, SCC’s chief executive, said: “The impact on Scottish business and the Scottish economy is two-fold.

“Rising prices impact on businesses’ costs and their ability to invest and create jobs, whilst weakening real incomes could depress consumer spending, which has been the strongest driver of economic growth in Scotland over the past few years.

“With a General Election campaign in full swing, politicians of all parties must remember that it is Scotland’s businesses that are the creators of jobs, wealth and growth in our economy, and businesses will be examining the various Parties’ plans to address this situation with keen interest.”

The GMB union called on the Prime Minister to end the public sector pay cap. General secretary Tim Roache, said: “It’s completely untenable. The Prime Minister keeps paying lip service to helping working people, well there’s an easy way to do it. Pay public sector workers what they’re worth.”

Meanwhile, house prices in Scotland dipped month-on-month in March, but there was still “modest” growth over the year, figures from Registers of Scotland revealed.

The average price of a property in Scotland was £137,139 in March, reflecting a decrease of one per cent compared to February. But the figure was up by 0.7 per cent when set against prices in March 2016. The biggest yearly increase was in East Dunbartonshire where the average price rose by more than 10 per cent to £196,332. The biggest decrease was in Aberdeen, where prices fell by 6.3 per cent to £163,050.