UK inflation eases to 3.4% in May

(Sharecast News) - UK inflation eased as expected in May, according to figures released on Wednesday by the Office for National Statistics. The consumer price index rose 3.4%, down from 3.5% in April and in line with expectations.

The ONS said the largest downward contribution came from transport, while the largest upward contributions came from food, and furniture and household goods.

Core CPI - which excludes food and energy - rose 3.5% in May, down from 3.8% the month before. This was also in line with analysts' expectations.

The data also showed that services CPI increased 4.7%, down from 5.4% in April.

ONS acting chief economist Richard Heys said: "A variety of counteracting price movements meant inflation was little changed in May.

"Air fares fell this month, compared with a large rise at the same time last year, as the timing of Easter and school holidays affected pricing. Meanwhile, motor fuel costs also saw a drop.

"These were partially offset by rising food prices, particularly items such as chocolates and meat products. The cost of furniture and household goods, including fridge freezers and vacuum cleaners, also increased."

Adam Deasy, economist at PwC, said: "A rate cut at Thursday's meeting was never likely, but if growth stays subdued and inflation continues its downward drift, the Bank is still on track to continue easing gradually later in the year.

"The most likely course remains a steady, quarterly rhythm of cuts; a slow-release valve to support the economy as inflationary pressure fades."