ANNUAL UK consumer prices index inflation remained stuck at 0.3 per cent in May, official figures have shown, reinforcing expectations that the Bank of England will be in no hurry to raise benchmark interest rates.
Economists had forecast that annual CPI inflation would have edged up to 0.4 per cent in May. The Treasury has set the Bank of England a target of two per cent.
Clothing and footwear prices put downward pressure on the annual CPI inflation rate. They fell by 0.2 per cent between April and May, in contrast to a 0.5 per cent rise at the same time last year.
Movements in the prices of computer games and food also dampened annual CPI inflation.
Upward pressure came from motor fuels and sea fares, and from prices of hotel stays and telephone equipment and services.
UK base rates have been at a record low of 0.5 per cent since March 2009.
Chris Williamson, chief economist at financial information company Markit, said: “UK inflation held steady at 0.3 per cent in May, adding to the view that no hike in interest rates is on the horizon and giving policymakers leeway to add stimulus to the economy if needed.
“Inflation has been stuck at 0.3 per cent for most of the year to date, and only modest further upward movement is likely in coming months, meaning the headline rate looks set to remain well below the Bank of England’s two per cent target for the foreseeable future.”
Annual inflation on the old all-items retail prices index measure rose from 1.3 per cent in April to 1.4 per cent in May.
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