Record jump in air fares sends UK inflation soaring to 2.7%

Prices rose across European, long-haul and domestic flights

A 22 per cent surge in air fares helped lift inflation higher than expected last month to heap more pressure on households as the rate of consumer price index (CPI) inflation increased to 2.7 per cent in May.

CPI inflation climbed to 2.7 per cent, up from 2.4 per cent in April, the Office for National Statistics (ONS) said.

Stubbornly high inflation was worse than City expectations for a 2.6 per cent rise in prices, and is expected to peak around 3 per cent over the next few months to ensure a summer of pain for households.

Inflation resumed its upward climb in May as air fares leapt 22 per cent from April - the highest rate on record for this time of year - while the rate of price falls for petrol and diesel slowed.

Prices rose across European, long-haul and domestic flights, the ONS said, adding that higher air fares were not necessarily linked to the early timing of the Easter holidays.

Overall transport prices rose by 0.4 per cent between April and May, the ONS said.

The price of clothing and footwear also rose 1.2 per cent month on month to tighten the squeeze on households, as the cost of women's outdoor clothing increased during a colder-than-normal month.

But food and drink prices helped hold back inflation, with price falls for meat, vegetables, fruit, sugar, sweets and jams.

Inflation is expected to surge even higher above the Bank of England's 2% target in the coming months as higher gas, electricity and water bills, plus rising tuition fees, send it to a summer peak.

The figures come ahead of minutes due this week from the Bank's June interest rates meeting - outgoing governor Sir Mervyn King's last meeting - which will reveal the level of support for more economic stimulus.

The Bank's Monetary Policy Committee voted to hold its quantitative easing (QE) programme steady at £375 billion this month, also holding rates at 0.5 per cent, amid signs of improvement in the economy.

The Bank is expected to hold off more QE until the arrival of new governor Mark Carney next month.

Today's figures also showed Retail Prices Index inflation, which includes housing costs, rose to 3.1 per cent in May, from 2.9 per cent in April.

Ratings agency Moody's said: "Ongoing price pressures combined with austerity will squeeze household finances through 2013."

Vicky Redwood, economist at Capital Economics, said that while higher than expected, inflation's peak is "hopefully not too far away now".

She said: "Inflation will probably get above 3 per cent in the next month or two - meaning that one of Mr Carney's first jobs will be to write an explanatory letter to the Chancellor."

The Treasury said inflation is down by almost a half from its peak of 5.2 per cent in 2011.

A spokeswoman said: "To help families with the cost of living, the Government has increased the tax-free personal allowance to £10,000, which will take 2.7 million people out of income tax altogether and save a typical taxpayer over £700.

"(It has) frozen fuel duty which has kept petrol prices 13p per litre lower than they would otherwise have been."

But TUC general secretary Frances O'Grady said Britain is set for a "joyless" recovery.

She said: "Britain's great wage squeeze shows no sign of abating.

"Forty consecutive months of real wage falls means people have less to spend on the high street, and are why economic green shoots are not being felt across the country."

Additional reporting, PA

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Business Admin / IT Assessor

£21000 - £26000 per annum: Recruitment Genius: A leading provider of apprentic...

Recruitment Genius: Senior 3rd Line IT Analyst

Negotiable: Recruitment Genius: They provide a work environment that is entrep...

Kinapse: Consultant, Advisory Services, Kinapse Ltd

from £35,000 pa: Kinapse: You will take leadership for discrete workstreams an...

Recruitment Genius: Recruitment Open Day - Print Company - Multiple Positions

£15000 - £25000 per annum: Recruitment Genius: This organisation is an establi...

Day In a Page

How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

How to stop an asteroid hitting Earth

Would people cooperate to face a global peril?
Just one day to find €1.6bn: Greece edges nearer euro exit

One day to find €1.6bn

Greece is edging inexorably towards an exit from the euro
New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

'Iron Man' augmented reality technology could become reality

Holographic projections would provide extra information on objects in a person's visual field in real time
Sugary drinks 'are killing 184,000 adults around the world every year'

Sugary drinks are killing 184,000 adults around the world every year

The drinks that should be eliminated from people's diets
Pride of Place: Historians map out untold LGBT histories of locations throughout UK

Historians map out untold LGBT histories

Public are being asked to help improve the map
Lionel, Patti, Burt and The Who rock Glasto

Lionel, Patti, Burt and The Who rock Glasto

This was the year of 24-carat Golden Oldies
Paris Fashion Week

Paris Fashion Week

Thom Browne's scarecrows offer a rare beacon in commercial offerings
A year of the caliphate:

Isis, a year of the caliphate

Who can defeat the so-called 'Islamic State' – and how?
Marks and Spencer: Can a new team of designers put the spark back into the high-street brand?

Marks and Spencer

Can a new team of designers put the spark back into the high-street brand?
'We haven't invaded France': Italy's Prime Minister 'reclaims' Europe's highest peak

'We haven't invaded France'

Italy's Prime Minister 'reclaims' Europe's highest peak
Isis in Kobani: Why we ignore the worst of the massacres

Why do we ignore the worst of the massacres?

The West’s determination not to offend its Sunni allies helps Isis and puts us all at risk, says Patrick Cockburn
7/7 bombings 10 years on: Four emergency workers who saved lives recall the shocking day that 52 people were killed

Remembering 7/7 ten years on

Four emergency workers recall their memories of that day – and reveal how it's affected them ever since
Humans: Are the scientists developing robots in danger of replicating the hit Channel 4 drama?

They’re here to help

We want robots to do our drudge work, and to look enough like us for comfort. But are the scientists developing artificial intelligence in danger of replicating the TV drama Humans?
Time to lay these myths about the Deep South to rest

Time to lay these myths about the Deep South to rest

'Heritage' is a loaded word in the Dixie, but the Charleston killings show how dangerous it is to cling to a deadly past, says Rupert Cornwell
What exactly does 'one' mean? Court of Appeal passes judgement on thorny mathematical issue

What exactly does 'one' mean?

Court of Appeal passes judgement on thorny mathematical issue