UK: Rising air fares help drive CPI inflation higher to 2.7%
PUBLISHED: 06:00 18 June 2013 | UPDATED: 09:56 18 June 2013
A surge in air fares helped lift inflation higher than expected last month to heap more pressure on households, official figures revealed today.
Consumer Prices Index (CPI) inflation climbed to 2.7% in May, from 2.4% in April, the Office for National Statistics (ONS) said.
Stubbornly high inflation was worse than City expectations for a 2.6% anuual rise, and inflation is expected to peak at around 3% over the next few months.
Inflation resumed its upward climb in May as air fares leapt 22% from April, the highest rate on record for this time of year, while the rate of price falls for petrol and diesel slowed.
Air fares rose across European, long-haul and domestic flights, the ONS said, adding that higher prices were not necessarily linked to the early timing of the Easter holidays.
Overall transport prices rose by 0.4% between April and May, the ONS said.
The price of clothing and footwear also rose 1.2% 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, the last for outgoing governor Sir Mervyn King, 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 £375billion this month, also holding rates at 0.5%, 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% in May, from 2.9% in April.