UK inflation unchanged at 4.5% in May

Inflation remained at a two-and-a-half-year high in May, official figures revealed today, as rising food, drink and fuel prices added to the squeeze on household spending.

The Consumer Prices Index (CPI) rate of inflation remained at 4.5% last month, the Office for National Statistics (ONS) said.

It is the 18th month in a row that inflation has been above the Bank of England's target of 2%, continuing the pain for cash-strapped consumers.

Upward pressure on inflation came from food prices, which rose 1.3% between April and May, while alcohol and tobacco prices increased 0.7% over the month, driven higher by hikes in duty and VAT.

The price motorists paid at the pumps rose to a record high of £1.36p per litre for petrol and £1.42p for diesel.

However, these inflationary pressures were largely offset by a decline in transport costs, which had been higher the previous month as airfares shot up amid the flurry of bank holidays caused by Easter and the royal wedding.

Today's announcement will keep pressure on the Bank of England to raise interest rates from their record low of 0.5% in a bid to beat down inflation.

But any calls for a rate hike are likely to be ignored as Bank governor Sir Mervyn King and his fellow Monetary Policy Committee members have already said they expect inflation to peak at 5% later this year before starting to fall back towards its target throughout 2012 and 2013.

Many economists now do not expect a rate rise before November at the earliest.

Jonathan Loynes, an economist at Capital Economics, expects further rises in food prices and future rises in gas and electricity bills "to take the headline inflation rate above 5%, and perhaps even above 5.5% by late summer".

However, he thinks inflation will fall back sharply next year as the impact of the VAT rise falls away. He called on the Bank to hold its nerve by not raising interest rates.

The Bank this week said there is little evidence that the UK is slipping into an inflationary spiral.

It is concerned that if people expect inflation to remain high, they will put more pressure on employers to raise wages, which will in turn lead to higher prices, known as a wage-prices spiral.

However, in a quarterly bulletin it reported few signs that inflation expectations have affected price or wage setting behaviour.

But today's figures reveal that the cost of many essential items continued to soar, hurting cash-strapped families whose wages have failed to rise as quickly as prices.

Food inflation was boosted by fruit, which rose by 4.7% between April and May, with grapes showing big increases. Meat prices also rose, whereas a year ago they had fallen.

Wine and beer price hikes in the month drove up alcohol inflation, despite a fall in the cost of whisky and vodka.

Alcohol and tobacco prices were 9.8% higher than the previous year, which is the fastest rate of increase since records began in 1997.

The cost of staying in a hotel or eating out also showed a record rise of 4.5% year-on-year, partly as a result of January's rise in VAT to 20% and rising food costs.

Declining transport costs were the biggest downward factor on inflation, as air fares dropped by 11.1% and sea fares fell by 14.7% following their Easter bounce.

The cost of furniture and household equipment also fell.

Voices
voicesGood for Lana Del Rey for helping kill that myth, writes Grace Dent
Sport
The Pipes and Drums of The Scottish Regiments perform during the Opening Ceremony for the Glasgow 2014 Commonwealth Games at Celtic Park on July 23, 2014 in Glasgow, Scotland.
Commonwealth GamesThe actor encouraged the one billion viewers of the event to donate to the children's charity
Sport
Karen Dunbar performs
Entertainers showcase local wit, talent and irrepressible spirit
Sport
Members of the Scotland deleagtion walk past during the opening ceremony of the 2014 Commonwealth Games at Celtic Park in Glasgow on July 23, 2014.
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
The Tour de France peloton rides over a bridge on the Grinton Moor, Yorkshire, earlier this month
film
Life and Style
fashion Designs are part of feminist art project by a British student
News
Very tasty: Vladimir Putin dining alone, perhaps sensibly
news
Life and Style
Listen here: Apple EarPods offer an alternative
techAre custom, 3D printed earbuds the solution?
Arts and Entertainment
Top guns: Cole advised the makers of Second World War film Fury, starring Brad Pitt
filmLt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a uniform
News
The University of California study monitored the reaction of 36 dogs
sciencePets' range of emotions revealed
News
Snoop Dogg pictured at The Hollywood Reporter Nominees' Night in February, 2013
people... says Snoop Dogg
Arts and Entertainment
A scene from Shakespeare in Love at the Noel Coward Theatre
theatreReview: Shakespeare in Love has moments of sheer stage poetry mixed with effervescent fun
News
Joining forces: young British men feature in an Isis video in which they urge Islamists in the West to join them in Iraq and Syria
newsWill the young Britons fighting in Syria be allowed to return home and resume their lives?
Arts and Entertainment
The nomination of 'The Wake' by Paul Kingsnorth has caused a stir
books
News
i100
Life and Style
food + drinkZebra meat is exotic and lean - but does it taste good?
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
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

BI Manager - £50,000

£49000 - £55000 per annum + competitive: Progressive Recruitment: My client is...

BI Project Manager - £48,000 - £54,000 - Midlands

£48000 - £54000 per annum + Benefits package: Progressive Recruitment: My clie...

VB.Net Developer

£35000 - £45000 per annum + competitive: Progressive Recruitment: If you're pa...

SAP Business Consultant (SD, MM and FICO), £55,000, Wakefield

£45000 - £55000 per annum + competitive: Progressive Recruitment: SAP Business...

Day In a Page

Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

Screwing your way to the top?

Good for Lana Del Rey for helping kill that myth, says Grace Dent
Will the young Britons fighting in Syria be allowed to return home and resume their lives?

Will Britons fighting in Syria be able to resume their lives?

Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

Beyoncé poses as Rosie the Riveter

The wartime poster girl became the ultimate American symbol of female empowerment
The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

The quest to find the perfect pair of earphones

Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

Meet the US Army's shooting star

Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform
Climate change threatens to make the antarctic fur seal extinct

Take a good look while you can

How climate change could wipe out this seal
Should emergency hospital weddings be made easier for the terminally ill?

Farewell, my lovely

Should emergency hospital weddings be made easier?
Man Booker Prize 2014 longlist: Crowdfunded novel nominated for first time

Crowdfunded novel nominated for Booker Prize

Paul Kingsnorth's 'The Wake' is in contention for the prestigious award
Vladimir Putin employs a full-time food taster to ensure his meals aren't poisoned

Vladimir Putin employs a full-time food taster

John Walsh salutes those brave souls who have, throughout history, put their knives on the line
Tour de France effect brings Hollywood blockbusters to Yorkshire

Tour de France effect brings Hollywood blockbusters to Yorkshire

A $25m thriller starring Sam Worthington to be made in God's Own Country
Will The Minerva Project - the first 'elite' American university to be launched in a century - change the face of higher learning?

Will The Minerva Project change the face of higher learning?

The university has no lecture halls, no debating societies, no sports teams and no fraternities. Instead, the 33 students who have made the cut at Minerva, will travel the world and change the face of higher learning
The 10 best pedicure products

Feet treat: 10 best pedicure products

Bags packed and all prepped for holidays, but feet in a state? Get them flip-flop-ready with our pick of the items for a DIY treatment
Commonwealth Games 2014: Great Scots! Planes and pipers welcome in Glasgow's Games

Commonwealth Games 2014

Great Scots! Planes and pipers welcome in Glasgow's Games
Jack Pitt-Brooke: Manchester City and Patrick Vieira make the right stand on racism

Jack Pitt-Brooke

Manchester City and Patrick Vieira make the right stand on racism
How Terry Newton tragedy made iron men seek help to tackle their psychological demons

How Newton tragedy made iron men seek help to tackle their psychological demons

Over a hundred rugby league players have contacted clinic to deal with mental challenges of game