Underlying inflation hit its highest level in 31 years last month in a blow to mortgage holders ahead of the Bank of England’s interest rate decision on Thursday. 

Core inflation, which strips out energy, food, alcohol and tobacco, hit 7.1pc in May. This is up from 6.8pc in May and is the highest rate since 1992, according to the Office for National Statistics.

Headline consumer price inflation refused to fall in the month, with prices up 8.7pc on the year, matching April’s rise and surprising economists who had anticipated a drop to 8.4pc.