THE TUC warned the Treasury against complacency yesterday after the the Office for National Statistics (ONS) announced that the 12-month inflation rate to July had risen slightly to 0.1 per cent.

The Tory government reacted by claiming its “economic plan is working,” attributing the incremental rise to “a strong combination of low prices and rising pay packets.”

But the ONS said that lower global oil costs and supermarket price wars had made the major contribution to keeping the inflation rate at close to zero for six months.

Smaller price reductions in summer clothing sales compared with a year ago were the main contributor to the rise in the Consumer Price Index, the ONS’s measure of inflation but falling prices for food and non-alcoholic beverages had partially offset the rise, the ONS said.

Low inflation prevents the Bank of England from increasing interest rates, which have remained at 0.5 per cent since 2009.

Waiting too long could risk economic recovery, warned monetary policy committee member Kristin Forbes.

But prematurely raising interest rates would bring “real risks to households,” said TUC general secretary Frances O’Grady.

She said: “There is still a large living-standards gap to make up, and it won’t be closed without a higher-productivity recovery.

“The government’s productivity plan won’t work without significant investment in skills, innovation and infrastructure.

“We need a sustainable recovery that works for the many and not just the few.”

Rail travellers will face an average season ticket price rise of 1 per cent in January. The annual new-year rise for regulated tickets is based on the previous July’s rate of Retail Price Index inflation.