UK inflation stays at 0.3% in May

Supermarket-Shopping-Groceries-Shop-700.jpgUK inflation has remained unchanged in May at 0.3 per cent, latest figures from the Office for National Statistics show.

The inflation figure remained stable after dipping in April from a 15-month high of 0.5 per cent in March, mostly due to an earlier Easter in 2016 compared to a year before.

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

However, gains were offset by declines in the price of clothing, food and games and toys.

Consumer price inflation continues to be below the Bank of England’s 2 per cent target. The bank’s May forecast said inflation would remain below 1 per cent until late 2016 and would stay below the 2 per cent target until 2018.

IHS Economics chief European and UK economist Howard Archer says the inflation and growth outlook will likely be very different should the UK vote to leave the EU in the upcoming referendum next week.

He says that if the UK votes to stay in the EU CPI “looks likely to trend gradually upwards over the coming months to reach 1 per cent in the fourth quarter of 2016 and 2 per cent in late 2017”.

He adds: “Rising inflation should result from the impact of past sharp drops in oil, commodity and energy prices gradually diminishing, magnified by current firmer oil and commodity prices.”