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UK inflation rate rises to 2.7% in May | UK inflation rate rises to 2.7% in May |
(35 minutes later) | |
The rate of consumer price index (CPI) inflation increased to 2.7% in May, up from 2.4% in April, the Office for National Statistics (ONS) said. | The rate of consumer price index (CPI) inflation increased to 2.7% in May, up from 2.4% in April, the Office for National Statistics (ONS) said. |
The ONS said the rise was due to a record increase in airfares and higher fuel prices. | The ONS said the rise was due to a record increase in airfares and higher fuel prices. |
Airfares rose by 22% between April and May, the highest increase since comparable records began in 2001. | Airfares rose by 22% between April and May, the highest increase since comparable records began in 2001. |
The Bank of England has said it expects inflation to exceed 3% this year. | The Bank of England has said it expects inflation to exceed 3% this year. |
May's rise in inflation was higher than analysts predicted. | May's rise in inflation was higher than analysts predicted. |
The price of clothing and footwear rose by 1.2% month-on-month, after a colder than normal May saw the cost of women's outdoor clothing increase. | The price of clothing and footwear rose by 1.2% month-on-month, after a colder than normal May saw the cost of women's outdoor clothing increase. |
However, food and drink prices fell, with a reduction in the cost of meat, vegetables, fruit, sugar and jams. | However, food and drink prices fell, with a reduction in the cost of meat, vegetables, fruit, sugar and jams. |
The Bank of England expects inflation to remain above its 2% target until early 2016. | The Bank of England expects inflation to remain above its 2% target until early 2016. |
The figures also showed that Retail Prices Index (RPI) inflation, which includes housing costs, rose to 3.1% in May from 2.9% in April. | |
Markit's chief economist Chris Williamson said that the rise in inflation acted as "a reminder that the ongoing erosion of spending power from rising prices will continue to act as a brake on economic recovery". | Markit's chief economist Chris Williamson said that the rise in inflation acted as "a reminder that the ongoing erosion of spending power from rising prices will continue to act as a brake on economic recovery". |
The sharp rise in airfares appeared to have taken analysts by surprise. | The sharp rise in airfares appeared to have taken analysts by surprise. |
The ONS says prices rose on European, long-haul and domestic flights, and were the highest on record for the time of year. | The ONS says prices rose on European, long-haul and domestic flights, and were the highest on record for the time of year. |
Ross Walker, UK economist at RBS, said: "The good news is that [inflation] is coming in noticeably below the Bank of England's May forecast, where they had a 2.9% average for the second quarter. | Ross Walker, UK economist at RBS, said: "The good news is that [inflation] is coming in noticeably below the Bank of England's May forecast, where they had a 2.9% average for the second quarter. |
"So looking over a two or three-month horizon, which I think you have to do, the inflation picture is a little better, but still above target and still a little bit sticky." | "So looking over a two or three-month horizon, which I think you have to do, the inflation picture is a little better, but still above target and still a little bit sticky." |
The inflation figure comes ahead of the release of minutes this week from the Bank of England's interest rate-setting Monetary Policy Committee (MPC). | The inflation figure comes ahead of the release of minutes this week from the Bank of England's interest rate-setting Monetary Policy Committee (MPC). |
The minutes from June's meeting will reveal the level of support among the committee for an expansion to quantitative easing. | |
Investec's chief economist Philip Shaw "The figures, if anything, are a touch stronger than expected. It looks pretty likely that CPI will go above 3% next month. The question is whether this will stand in the way of further quantitative easing. I think probably not. | |
"Next month is likely to be the peak and inflation looks set to fall back to target, or even below target, in the medium term." |