UK Inflation Falls to 1.5% in May

Lower fares for flights helped to push the rate of inflation down to its lowest level in four-and-a-half years in May.

The Consumer Prices Index fell to 1.5% in May compared with 1.8% in April, according to the Office for National Statistics.

It is the sixth consecutive month that inflation has been below the Bank of England’s 2% target.

A fall in food prices also helped drive down the rate of inflation.

The ONS said the price of food and non-alcoholic beverages fell by 0.6% year-on-year in May, the sharpest fall in a decade.

Falls in the price of everyday basics such as bread, cereals and vegetables drove the drop.

The rate of inflation, as measured by the Retail Prices Index (RPI) fell to 2.4% in May from 2.5% in April.

Prices, however, are still increasing faster than average earnings, which rose 0.7% in the three months to April.

The ONS said the timing of Easter, which fell in April this year, was likely to have had an impact on the rate of inflation, particularly on travel costs, which rose sharply to coincide with the Easter holiday.

Separate figures from the Office for National Statistics showed that UK house prices leapt by 9.9% in the 12 months to April to reach a new high of £260,000.

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza