In the last month, July, the retail inflation was chiefly driven by hardening of prices in sugar and confectionery items, pan, tobacco, and intoxicants. The number of job openings rose to 6.170 million in July from a downwardly revised 6.116 million in June.
"This means less pressure on the Bank of England to consider raising interest rates, and will allow the MPC to remove the sticking plaster of ultra-low interest rates as slowly as they like". "But the first hike is still likely to come before markets expect".
Markets are hopeful that this fresh uptick in inflationary pressure could encourage the Bank of England (BoE) to take a more hawkish view at its latest policy meeting.
Wage growth that is lagging behind inflation is also a serious concern for policymakers as this could dampen household spending, going forward. Yet it looks likely that inflation will fall back in the coming months as the effect of Brexit-induced sterling weakness fall out of the year-on-year calculation'. Wages are now rising at an annual rate of around 2.1%. Interestingly, MPC members have been particularly quiet, with even BoE Governor Carney refraining from making comment on monetary policy, which suggests that the BoE's forecast of a rate hike no sooner than the 3 quarter of 2018 remains unchanged.
Sterling rose to a one-month high against the euro, with EUR/GBP down 0.77% to 0.9004 from 0.9056 earlier.
In July, the inflation rate had shot up for the first time in three months, when it rose by 2.36 per cent. CPIH is the ONS's preferred measure of inflation, which includes costs associated with living in, maintaining and owning a home.
"However, Brexit uncertainty continues to cloud the pound's outlook".
On the downside, it was estimated that higher inflation will hit the poorest households the worst, which could lead to high-risk borrowing and debt accumulation.
'The withdrawal of part of the stimulus that the Committee had injected in August past year would help to moderate the inflation overshoot while leaving monetary policy very supportive'.
The next few days will be key for the currency as investors anticipate the possibility of another split within the BoE which could strengthen the case for a rate rise.
Neil Wilson, senior analyst at ETX Capital, said: 'Whilst this inflation report is unlikely to mean the MPC votes for a rate hike Thursday, it does increase the prospect of interest rates raising sooner than the market now anticipates'.
The pound jumped against other currency majors on Tuesday when United Kingdom inflation data came in stronger-than-forecast.