Economists expected inflation to rise to 3.7%, though the Bank of England forecast for July inflation was 3.76%, slightly higher than consensus. Inflation in the UK has risen to an unexpected 3.8%, the Office for National Statistics says.

British inflation hit its highest in 18 months in July when it increased to 3.8% from 3.6%, official data showed on Wednesday, once again leaving the country with the fastest rate of price increases among the world's largest rich economies.

Ben Plowden, chief executive of lobby group Campaign for Better Transport, said: “Today’s inflation figure could mean a big fare rise for rail passengers next year, especially if the Government decides to go with an above-inflation increase like we saw this year.