Latest inflation figures

And so, inflation continues to alter.  In the UK price inflation, as measured by the Consumer Prices Index (CPI), has dropped to 3.4% for the year to May with falls in the prices of food, non-alcoholic drinks and petrol.  This is a fall from 3.7% and is bigger than expected.

The CPI inflation was forecast to be at 3.5% for the year to May and this slightly bigger than expected fall has meant that sterling has lost ground against both the dollar and the euro.

The Retail Prices Index (RPI) measure of inflation, which includes housing costs, also fell in May.  It is now at 5.1% down from 5.4% in April.

Whilst inflation is still above the Government target, this new data should ease some concerns about UK inflation and a need to increase interest rates to control rising inflation.

The Bank of England’s rate-setting monetary policy committee will now no doubt be hoping that inflation will continue to fall towards its target of 2%.  This new data for the year to May could be the beginning of this process, or it could be just a respite in recently rising inflation figures.

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