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| UK inflation rate falls to four-year low in May | |
| (35 minutes later) | |
| Lower transport costs and falling food prices helped push the UK's inflation rate to a four-and-a-half-year low at 1.5 per cent in May. | Lower transport costs and falling food prices helped push the UK's inflation rate to a four-and-a-half-year low at 1.5 per cent in May. |
| The latest figures mark the sixth consecutive month in which inflation, as measured by Consumer Prices Index (CPI), has come in below the Bank of England's 2 per cent target, according to the Office for National Statistics. | The latest figures mark the sixth consecutive month in which inflation, as measured by Consumer Prices Index (CPI), has come in below the Bank of England's 2 per cent target, according to the Office for National Statistics. |
| "We suspect that 1.5 per cent will mark the low point for consumer price inflation, but it looks well placed to remain below 2 per cent for the rest of 2014, and very possibly beyond, " said Howard Archer, chief UK economist, at IHS Global Insight. | "We suspect that 1.5 per cent will mark the low point for consumer price inflation, but it looks well placed to remain below 2 per cent for the rest of 2014, and very possibly beyond, " said Howard Archer, chief UK economist, at IHS Global Insight. |
| Falling transport services costs, notably air fares, provided the largest contribution to the decrease in the rate. Food and non-alcoholic beverages fell by 0.6 per cent year-on- year- the sharpest fall since October 2004- as Britain's supermarkets wage war against discount grocers Lidl and Aldi. | Falling transport services costs, notably air fares, provided the largest contribution to the decrease in the rate. Food and non-alcoholic beverages fell by 0.6 per cent year-on- year- the sharpest fall since October 2004- as Britain's supermarkets wage war against discount grocers Lidl and Aldi. |
| The rate of inflation, as measured by the Retail Prices Index (RPI), which includes housing costs, fell to 2.4 per cent in May from 2.5 per cent in April. | The rate of inflation, as measured by the Retail Prices Index (RPI), which includes housing costs, fell to 2.4 per cent in May from 2.5 per cent in April. |
| Reacting to the figures, Prime Minister David Cameron and George Osborne tweeted May's inflation drop shows the Government's long term economic plan is working, but insisted there is "lots more to do". | Reacting to the figures, Prime Minister David Cameron and George Osborne tweeted May's inflation drop shows the Government's long term economic plan is working, but insisted there is "lots more to do". |
| Despite the drop in inflation, it remains well above the rate of wage increases, which have fallen to 0.7 per cent. Inflation, which dents consumers' buying power, has stood above pay growth since April 2010, meaning households are yet to benefit from the coalition's much-heralded economic recovery. | Despite the drop in inflation, it remains well above the rate of wage increases, which have fallen to 0.7 per cent. Inflation, which dents consumers' buying power, has stood above pay growth since April 2010, meaning households are yet to benefit from the coalition's much-heralded economic recovery. |
| Labour's Shadow Treasury Minister Catherine McKinnell said she welcomed the fall in the inflation rate, but insisted that "most people are still feeling the squeeze". | |
| She added: "Wages after inflation have now fallen by over £1,600 a year under David Cameron and the link between the wealth of the nation and family finances is broken." | |
| Good news that inflation down to 1.5%, lowest for 5 years. Another sign that our long term economic plan is working, but lots more to do | Good news that inflation down to 1.5%, lowest for 5 years. Another sign that our long term economic plan is working, but lots more to do |
| Good news that inflation is at its lowest for 5 years - it means more stability and financial security for everyone. #LongTermEconomicPlan | Good news that inflation is at its lowest for 5 years - it means more stability and financial security for everyone. #LongTermEconomicPlan |
| The Treasury added: "Lower inflation and rising job numbers show that the government’s long term plan is working and Britain is coming back. But the job is not done, which is why we must continue to work through that plan." | The Treasury added: "Lower inflation and rising job numbers show that the government’s long term plan is working and Britain is coming back. But the job is not done, which is why we must continue to work through that plan." |
| In a separate development, the ONS showed UK house prices climbed by 9.9 per cent in the year to April to reach a new high of £260,000. London continued to see the strongest growth, with prices jumping by 18.7 per cent to £485,000 on average. | In a separate development, the ONS showed UK house prices climbed by 9.9 per cent in the year to April to reach a new high of £260,000. London continued to see the strongest growth, with prices jumping by 18.7 per cent to £485,000 on average. |