Inflation steady at 0.3% as food prices slide
Inflation remained unchanged last month as the rising cost of transport and eating out was offset by sliding clothes and food prices, according to official figures published today.
The Office for National Statistics (ONS) said consumer prices index (CPI) inflation came in at 0.3 per cent for May, unchanged from the previous month when it fell for the first time since last September.
Transport costs climbed 0.9 per cent as the price of diesel stepped up 3p per litre this year. Rising sea fares also had an upward impact, picking up slightly in 2016 after falling a year ago.
The cost of restaurants and hotel bookings were also on the rise, climbing 0.5 per cent in May compared with 0.2 per cent in the same month a year ago, with overnight stays in hotels rising by more than they did in 2015.
But these rises were pegged back as shoppers saw the cost of food and non-alcoholic beverages drop 0.4 per cent between April and May, as vegetable and confectionery prices took a tumble.
Clothing and footwear price tags were also easing back, down 0.2 per cent between April and May, with a small impact coming from the falling cost of children’s clothes.
Economists were expecting CPI to bounce back last month after it took a surprise fall from a 15-month high of 0.5 per cent in March.
Maike Currie, personal investing director at Fidelity International, said: “With inflation still a far cry from the Bank of England’s 2 per cent target, don’t expect any change this Thursday when the monetary policy committee announces its hand on interest rates.
“Lower for longer will remain the mantra with some expecting the Bank of England to re-enter the Brexit debate this week when it releases its final decision on interest rates before Britain decides its future in the EU. Opinion polls over the weekend showing the Leave camp gaining traction has sent ripples through global markets.”