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 tomorrow.

The consumer prices index remained flat at 8.7pc in May, ahead of economists expectations of a drop to 8.4pc.

However, core inflation, which strips out volatile measures like food and energy prices, increased to 7.1pc from 6.8pc in April, its highest level since 1992.

Bank of England decision-makers, who will convene to set interest rates tomorrow, often focus more intently on the core inflation figures rather than the headline inflation number.

The Monetary Policy Committee is widely expected to raise rates by 0.25 percentage points, with markets speculating over the possibility of a larger rise and how high rates could go.

It comes as homeowners face surging borrowing costs, with the average rate for a two-year fixed mortgage deal increasing to 6.07pc on Tuesday, according to Moneyfacts.

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