ANNUAL UK consumer prices index inflation rose by more than expected in May, to 2.7% from 2.4% in April, according to official figures which underline the squeeze on households' spending power.

Howard Archer, chief UK economist at consultancy IHS Global Insight, highlighted the fact that annual CPI inflation in May was more than twice the latest 1.3% year-on-year rate of underlying earnings growth.

Yesterday's inflation figures, published by the Office for National Statistics (ONS), underline the continuing challenges facing the UK economy as it struggles to stage a recovery five years after the onset of the Great Recession of 2008/09.

In the first quarter, household spending grew by just 0.1%, according to ONS figures released last month.

Mr Archer said: "With inflation moving back up to 2.7% in May, the squeeze on consumer purchasing power remains appreciable, given that inflation is running at essentially double underlying annual average earnings growth of 1.3% in April.

"This highlights the fact that there remains a very real risk that muted consumer spending could limit growth over the coming months."

The City had forecast a rise in annual CPI inflation in May, to 2.6%.

The ONS cited a 22% month-on-month leap in overall air fares between April and May as a key factor behind the jump in annual inflation. Air fares rose 1.4% between April and May last year.

Air fares had fallen by 6.4% between March and April. This was in contrast to a 7.4% month-on-month rise in April 2012. Easter fell earlier this year than in 2012, affecting the pattern of air fares.

Petrol and diesel prices also exerted an upward impact on the annual inflation rate between April and May, falling by less last month than a year earlier.

The ONS calculated that petrol prices, overall, fell by 3.1 pence per litre between April and May, compared with a 4.5p decrease a year earlier. Diesel prices meanwhile declined by 3.2p-a-litre month-on-month in May, having fallen by 4.4p at the same time last year.

Vicky Redwood, chief UK economist at consultancy Capital Economics, said: "May's rise in inflation confirmed that April's fall was primarily the result of some temporary factors. That said, the peak is hopefully not too far away now... Easter timing effects had pushed down inflation in April, so much of May's rise just reflected these unwinding."

Referring to the incoming Bank of England Governor Mark Carney, the Canadian who takes over from Sir Mervyn King on July 1, Ms Redwood added: "Inflation will probably get above 3% in the next month or two, meaning that one of Mr Carney's first jobs will be to write an explanatory letter to the Chancellor.

"But this will just reflect unfavourable base effects, with inflation in the middle of last year depressed by sharp falls in petrol prices and unusually sharp summer discounting on the high street.

"Thereafter, inflation should begin a slow but steady drift down."

Annual inflation on the old all-items retail prices index measure rose from 2.9% in April to 3.1% in May.