ONS report: Inflation down slightly in May

According to the Office for National Statistics, consumer price inflation in the UK was down to 2.5 percent in May, from 2.8 percent in April. This was its lowest level in seven months. The Retail Prices Index, which is often used in bargaining for pay, was also lower in May, down from April’s 4.5 percent to 4.3 percent last month. The core inflation rate, excluding food, alcohol, tobacco and energy was up a bit more in May, however, compared to April, rising to 1.9 percent in May compared to April’s rate of 1.8 percent.

Lower gas and electric utilities prices compared with a year ago accounted for much of the decline in inflation. Food prices, down in the case of vegetables and meat, also had a hand in the declines. The cost of air travel was up significantly, however, from last year at the same time

While this is good news, Bank of England governor Mervyn King warned that unless both companies and consumers spend less money interest rates will rise again before the end of the year. He also warned individuals who are thinking of purchasing a home that they should not borrow so much money that they can only afford their mortgage payments if rates don’t rise.

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