Inflation held steady at 2% in June, the latest figures from the Office for National Statistics show.

While the consumer prices index remains in line with the 2% target set by the Government for the Bank of England, persistently high services inflation at 5.7% will be a concern for rate setters.

The Monetary Policy Committee has previously said it will be keeping an eye on price rises in this sector, which includes everything from restaurants to hairdressers.

Hotel prices were one of the biggest upward drivers of inflation in June, with a monthly rise of 8.8%, compared to 1.7% a year earlier.

But clothing and footwear costs fell by 1.2% on a monthly basis, compared to an increase of 0.2% a year ago.

Deutsche Bank chief UK economist Sanjay Raja says: “Today’s inflation data won’t be what the doctor ordered. 

“Markets have pared back expectations of an August rate cut from near 50% to 25%. 

He says that despite CPI rate holding in line with expectations, services CPI was the “fly in the ointment” as it “yet again, surprised on the upside” marking the third consecutive month where it was above forecasts.

Despite this, Rightmove mortgage expert Matt Smith says that the stability seen in the headline inflation rate is welcome.

He says: “Although there is debate around the timing of the first Base Rate cut due to concerns around service inflation, it is looking increasingly likely that it will either arrive in August or September. 

“In the meantime, we expect to see mortgage rates continue to fall back as lenders compete for business.”