United Kingdom: Inflation dips in May

Consumer prices rose 0.3% in May over the previous month, down from April’s 0.6% rise. May’s reading was underpinned by higher prices for furniture, household equipment and maintenance; and clothing and footwear.

Inflation decreased from 2.1% to 2.0%, hitting the Bank of England’s (BoE) target. Core inflation—which excludes food and energy costs—fell from 1.8% to 1.7%.

Muted price pressures should continue to give the Central Bank room to hold rates in the near-term to support the economy, amid a fraught political panorama and frail economic momentum in the Euro area.

UK Inflation Forecast

The Bank of England revised down its inflation projections in its May inflation report, and now sees inflation at 1.6% in Q4 2019 and 2.0% in Q4 2020. FocusEconomics Consensus Forecast panelists expect inflation to average 1.9% in 2019 and 2.0% in 2020.