UK Inflation Slowed by Airfare Correction and Tax Data Fix
UK inflation eased in May, influenced by falling airfares and corrected tax data mistakes. Consumer prices rose by 3.4% over the year, as predicted. Despite falling services inflation, food prices surged, affecting low-income households. Economists forecast the Bank of England will maintain current borrowing rates.
In May, British inflation saw a slowdown, largely influenced by a drop in airfares post-Easter and the correction of a prior tax data error. The Office for National Statistics reported a 3.4% annual increase in consumer prices, aligned with expectations from economists and the Bank of England.
The Office for National Statistics disclosed that services price inflation cooled to 4.7% from April's 5.4%, mirroring BoE forecasts. This easing is notable despite an uptick in food prices, marking the steepest rise in over a year, impacting low-income earners substantially.
The latest data release is not expected to alter upcoming interest rate decisions. Economists anticipate the Bank of England will hold borrowing rates steady in June. The sterling witnessed a slight increase against the US dollar following the update. Broader concerns remain over the impact of the Iran-Israel conflict on future inflationary pressures.
(With inputs from agencies.)
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