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Rising prices for recreational goods, including computer games, toys and hobbies contributed to the increase in the inflation rate last month.

According to the Office for National Statistics, inflation rose 0.2% to 2.9% in May, up from 2.7% in April and above the Bank of England’s 2% target.

The rate has climbed gradually to reach a new four-year high, last seen in June 2013.

Prices in food and electricity also went up but there were falls in motor fuel prices and air and sea fares.

Suren Thiru, head of economics at the British Chambers of Commerce, said:

“Higher inflation is a key business concern as it squeezes margins and weakens their ability to invest, particularly during this time of heightened political uncertainty.

“A key focus of the new government must therefore be on easing the current pressure on firms’ cost base by tackling the burden of upfront costs and taxes associated with doing business in the UK. 

“It is also imperative the Monetary Policy Committee continues to ‘look through’ the expected increases in inflation and keep interest rates on hold.”

Contact us today about how inflation could affect you and your business.