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UK Inflation Holds Steady, Easing Rate Hike Pressure
17 Jun
Summary
- UK inflation remained at 2.8% in May, below forecasts.
- Lower inflation reduces likelihood of Bank of England rate hikes.
- Falling oil prices and food inflation aid the steady rate.
In May, UK inflation unexpectedly remained unchanged at 2.8%, offering a reprieve to the Bank of England as it prepares for its upcoming interest rate decision. This figure was below the 3.0% forecast by economists. The monthly inflation rate also slowed more sharply than anticipated.
This stable inflation reading, coupled with a retreat in oil prices, has bolstered confidence that the Bank's monetary policy committee will likely hold interest rates steady. Experts believe a rate hike is improbable this week and unlikely for the remainder of the year.
While services inflation saw a modest increase, a slowdown in food and drink price growth helped to counteract this. Inflation remains below the Bank's own projections, supporting the expectation that interest rates will be left unchanged.
