Inflation remains historically high as interest rate rise looms
The rate of inflation remained stubbornly high at 8.7% in May – the same figure as April – in a move that could add to the fears of mortgage holders across the UK as the Bank of England decides whether to raise interest rates tomorrow (Thursday 22).
Rising prices for air travel, recreational and cultural goods and services, and second-hand cars resulted in inflation remaining unchanged in May, according to the Office for National Statistics (ONS).
Falling prices for motor fuel meant that these rises were cancelled out. However, core inflation, which excludes “volatile” goods such as fuel and food, actually rose in May, said the ONS.
It was up from 6.8% to 7.1% – a figure that will case a headache for both the Government and the Bank of England.
ONS Chief Economist Grant Fitzner, said: “After last month’s fall, annual inflation was little changed in May and remains at a historically high level.
“The cost of airfares rose by more than a year ago and is at a higher level than usual for May. Rising prices for second-hand cars, live music events and computer games also contributed to inflation remaining high.
“These were offset by a fall in the cost of petrol. Food price inflation remains high, but the rate has eased slightly this month with costs rising more slowly than this time last year.”