FINANCIAL pressure on households increased last month as inflation surged to its highest level for more than five years, reaching three per cent.

Figures from the Office for National Statistics (ONS) showed the Consumer Price Index (CPI) measure of inflation rose in line with expectations from 2.9 per cent in August.

Consumers have been feeling the pinch as the weakened pound – which is being walloped by Brexit – bumps up the cost of essentials such as food and transport while wage growth lags behind inflation.

Kirsty Blackman, the SNP’s economy spokesperson, said the UK Government must use the November Budget to scrap the public-sector cap, move to tackle to the UK wages crisis and support those on benefits to prevent household budgets being hit even further.

“Tory extreme Brexit plans are already hitting families and businesses across the country, and rising inflation will squeeze tight household budgets even further as prices rise while incomes fall,” she said.

“As Brexit continues to drive up the cost of living, and impact across the economy, the UK Government must commit to protecting our vital membership of the single market and customs union to avoid further devastation to jobs, incomes and businesses.”

The inflation figure is increasing pressure on the Bank of England to raise interest rates, and governor Mark Carney said yesterday that it may be “appropriate” to hike rates as Brexit-fuelled inflation is set to rise further.

He told MPs that policymakers on the bank’s Monetary Policy Committee (MPC) believed a rise in interest rates may be needed over the coming months as it looks to tackle surging inflation caused by the weak pound.

Carney said: “Having made progress over the last 14 months, the economy having created almost 400,000 jobs... having used up most spare capacity, having seen some early evidence of building domestic pressures, the judgment of the majority of the committee is that some raise in interest rate in coming months may be appropriate in order to have that sustainability.”

However, Liz Cameron, CEO of Scottish Chambers of Commerce, said the MPC should not raise interest rates.

“Speculation continues to increase around the prospect of an interest-rates rise in November, yet the inflation figures emphasise the uncertainty this would cause to both Scottish business and the UK economy as a whole. In the current climate, while real wages are falling, the MPC should continue to hold steady on interest rates.

“It is critical that the measures provided in the Chancellor’s upcoming Autumn Budget are clearly designed to boost business confidence and increase investment. Ensuring a stable environment for business growth will contribute to rising wages, and a subsequent rise in consumer confidence.”

Andrew Sentance, senior economic adviser at professional services firm PwC, said he would not rule out a further rise in the inflation rate. “This latest rise in inflation will add to the squeeze on the spending power of consumers and is likely to prolong the period of sluggish growth we are currently seeing here in the UK,” he said. “A further rise in the inflation rate later this year cannot be ruled out.”

He added:“Relatively high inflation will also add to the pressure on the Bank of England MPC to raise interest rates next month. A gradual rise in interest rates would help support sterling and reduce the risk that the current surge in inflation becomes more prolonged and persistent.”

Tim Roache, general secretary of the GMB union, told a rally at Westminster, that ministers were “hopelessly out of touch” as food prices soared and people who worked all hours struggled to pay bills.

He said: “It’s shameful that in Britain today ordinary working people can’t make ends meet because wage rises are failing to keep pace with inflation.”