UK inflation eases to 3.4% in May
The Office for National Statistics (ONS) has today announced Consumer Price Inflation (CPI) fell to 3.4% in May – down from the 17-month high of 3.7% in April.
While the level still far exceeds the 2% target, the drop was quicker than the 3.5% many analysts had expected.
The Bank of England’s Governor, Mervyn King, has already reiterated that CPI will fall to the 2% target before the end of the year.
The fall in the inflation rate was attributed to weaker rises in food and petrol prices, according to analysts.
In the meantime, on a monthly basis, CPI rose by 0.2%, less than the 0.3% gain expected by analysts.
Meanwhile, Retail Price Inflation (RPI), which includes mortgage costs and is used as the basis for many wage deals, also eased to 5.1%, from 5.3% in April.
The CPI inflation rate is a benchmark for the Bank of England’s Monetary Policy Committee (MPC) but last week, the Committee elected to keep UK interest rates on hold at the historically low level of 0.5% for the 15th consecutive month.
Mr King has previously dismissed fears that soaring inflation would demand a significant rise in interest rates in the months ahead.
As a result, most analysts expect no monetary tightening until the final quarter of the year.