UK inflation hit its highest level since September 2013 in February, with food prices recording their first annual increase for over two years.

The Consumer Prices Index (CPI) rose to 2.3 percent in February, a sharp increase from 1.8 percent in January. Food prices increased by 0.3 percent on the same period a year earlier.

The Bank of England has taken the rising inflation into account, expecting it to peak at 2.8 percent next year. According to the latest figures from the Office for National Statistics, rising transport costs, particularly for fuel, were the main contributors to the increase in the rate.

Rising inflation rates are likely to have negative effects for savers, with Vince Smith-Hughes, retirement expert at Prudential, commenting:

“These rising inflation figures will dismay pensioners who are living on a fixed income or drawing down an income from their pension fund. Rising inflation hits retired people harder than others because they spend a disproportionate amount of their income on fuel, food and heating.

“Those drawing down an income will need to think carefully about how much they withdraw from their pensions. Increasing withdrawals to pay for higher food and fuel bills means they run a greater risk of exhausting their pension savings.”

British stock markets are down on the news, with the FTSE 100 is currently down 0.03pc to 7,426.21, while the FTSE 250 has fallen 0.16pc to 19,120.96 (1336GMT).