Cost of living

Wage growth and stationary core inflation - a measure that excludes fuel and food - have prompted experts to cast doubt on whether the prime minister will hit his 5.3% target.

Pay rose 7.8% in the three months to June compared with a year earlier, while core inflation stood stubbornly at 6.9%, putting his promise "in jeopardy", according to the Institute for Fiscal Studies.

"The prime minister's target to halve the rate of inflation by the end of the year was always a little odd as there is only so much the Treasury can do to influence the pace of price increases," Heidi Karjalainen, a research economist at the IFS, said.

She said Mr Sunak "may have hoped he could rely on falling energy prices to do most of the work" but with four months to go "it no longer seems at all clear that inflation at the end of the year will have fallen by enough".

In theory, rising wages could stimulate demand and increase costs, adding to inflationary pressure.

"Accelerating pay growth will make even the prime minister's promise to halve inflation hard to meet, let alone the Bank's mandate of reducing it to 2%," James Smith, the Resolution Foundation's research director, said.

He said the UK has the highest rate in the G7 and the Bank faces a "daunting task in further taming price pressures".