First UK inflation increase of year forecast in setback for Bank of England

City economists predict annual rate to rise to 2.3% in July after two months at Bank's 2% target

The Bank of England is poised for a setback in the battle against high inflation this week amid expectations for a first increase in the headline rate this year, highlighting the pressure from the cost of living crisis.

In a week of key updates from the British economy, official figures on Wednesday are expected to show inflation returned above the Bank's 2% target in July, driven in part by fast-rising prices for air fares, package holidays and hotels.