UK inflation rate remains steady

Partially offsetting downward effects came from price changes for games, domestic electricity, food and non-alcoholic beverages, and furniture and furnishings.

“The largest, partially offsetting downward effect came from a range of recreational and cultural goods and services, where prices, overall, rose by 0.1% between April and May this year compared with a larger rise of 0.9% between the same two months a year ago,” said the ONS.

“The main effect came from games, toys and hobbies, where prices fell this year but rose a year ago, particularly for computer games. Prices for these games are heavily dependent on the composition of bestseller charts, often resulting in large overall price changes from month to month.

“Housing and household services also had a large downward effect, with domestic electricity prices rising by 0.1% between April and May 2018 compared with 4.0% between the same two months a year ago.”

Meanwhile, the 12-month growth rate of the Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose to 2.3% in May 2018, its first increase since September 2017.

This was driven largely by transport, with global prices for crude oil partially driving growth in the prices of fuels and lubricants.

Recent increases in global prices for crude oil have also driven increases in the 12-month growth rate for the input Producer Price Index (PPI), which rose to 9.2% in May 2018.

Annual rental price growth in London turned negative for the first time since 2010 but remained unchanged in Great Britain as a whole.

Head of Inflation at the Office for National Statistics, Mike Hardie, said: “Recent large rises in the cost of crude oil have fed through to prices paid by consumers at the pump. Air fares and ferry prices also contributed to the overall increase in inflation due to the timing of Easter. However, these effects have been partly offset by price falls in computer games and energy costs rising by less than this time last year.

“Annual house price growth continued to slow, with weak growth in London offset by increases in the South West and West Midlands. Nationally, rental prices remained unchanged, with rents in London falling on the year for the first time in nearly eight years.”

Kevin Doran, chief investment officer at AJ Bell, added: “The Bank of England will be disappointed to see inflation holding firm at 2.4%, some way above its 2% target.  The Monetary Policy Committee unanimously decided against an interest rate rise in May and will now be watching inflation very closely to see if this is a temporary blip in the downward trend or if it starts going up again.

“The rising oil price and recent weakness in the pound are unlikely to help here.  The jump in the oil price has started to hit petrol pumps, pushing up costs for UK consumers and businesses alike. In addition, the weak pound will be driving up input costs for many UK companies which will ultimately filter through to UK consumers in the coming months.”