Inflation remains steady in May

March remains the exception in 2016, when its 0.5% growth was the only month in 2016 so far when headline inflation has not been 0.3%.

Rises in transport costs, restaurant and hotel bills and the price of telecommunication services were the main upward contributors to change in the rate.

These upward pressures were offset by falls in the price of clothing, food and games, toys and hobbies.

 

Chris Williamson, chief economist at Markit, said: “UK inflation held steady at 0.3% in May, adding to the view that no hike in interest rates is on the horizon and giving policymakers leeway to add stimulus to the economy if needed.

 

“Looking ahead, the rise in the oil price is likely to add further to inflation in coming months, but subdued wage growth should help keep the headline rate down below the Bank’s target.

 

“Recruiters reported the lowest for two and a half years in May as demand for staff cooled and low inflation kept wage bargaining power down. The exchange rate is more of an unknown, and much of course depends on the outcome of the June 23rd referendum.”