Inflation rose more than expected to 2.1 per cent in October, after the Consumer Price Index (CPI), the measure used by The Bank of England to set interest rates, rose from 1.8 per cent to 2.1 per cent making it the first time the rate has exceeded its 2 per cent target since June.

Economists are predicting that there will also be further hikes in the price of food, which reached a six-month high of 5.1 per cent in October, and petrol, which was hit by a rise of 2.7 per cent putting inflation now at a staggering 12 per cent.

Research carried out by the Alliance Trust has also found that while all age groups are starting to feel the pinch from the increased cost of living, the over 75s and the under 30s are suffering the highest rate of inflation, at 2.5 per cent – which is 19 per cent higher than the official headline rate.

Rising food prices continue to weigh on the elderly, who spend a large proportion of their monthly budget on food. Dairy products, oils and fats have all increased by more than 11 per cent over the last year, vegetable prices have risen almost 8 per cent and bread prices are up 5 per cent.

The youngest age group, the under 30s, have experienced a sharp rise in inflation due to rising prices for food, rent and education which itself has crept up more than 13 per cent over the last year.

Moreover, the Bank of England has cast doubts over the likelihood of a cut in the increasing interest rates after official data released by the National Statistics Office showed that the rapid increase in petrol prices and food costs were responsible for the boost in the cost of living.

Shona Dobbie, Head of the Alliance Trust Research Centre comments: “Our study continues to highlight the extent to which the real effect of inflation differs from what the Government’s headline figure suggests, and varies across different age groups. Throughout the course of our study, which started in 2003, the elderly have consistently suffered the highest levels of inflation.

“More than four years of higher-than-average inflation has been eating into pensioners’ budgets and it looks like this situation is going to continue for some time. We are also concerned about the more recent trend of young adults also facing inflation which is significantly higher than the headline rate, largely due to higher rents and education costs, as well as the costs of basic goods.”

The British Chamber of Commerce has said that there is room for a slight cut in interest rates but has warned that businesses and individuals need to prepare themselves for ‘more difficult times’ ahead.

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