The Consumer Price Index measure of inflation remained flat in May at 2.4 per cent, coming below analysts’ forecasts despite huge increases in fuel costs.
According to the latest data released by the Office for National Statistics (ONS), inflation came in below Reuters analysts’ expectations of 2.5 per cent.
This was despite the largest monthly rise in fuel costs since January 2011, jumping 3.8 per cent, which threatened to trickle through to shop prices during the month.
The sharp rise in fuel prices was partially offset by a range of recreational goods, including computer games toys and hobbies where prices fell, following an increase a year earlier.
“Prices for these games are heavily dependent on the composition of bestseller charts, often resulting in large overall price changes from month to month,” the ONS said.
Food and non-alcoholic beverages also helped offset rising inflation, with sugar, jams, syrups and chocolate seeeing prices fall, following a rise a year prior.
Hargreaves Lansdown’s senior economist Ben Brettell said: “Following yesterday’s weak wage growth numbers, today’s news that inflation held steady at 2.4 per cent in May provides further food for thought for the Monetary Policy Committee, as they consider an August rate rise.
“Inflation had been expected to tick up to 2.5 per cent, but the unchanged headline number masks a few details which could show inflationary pressure is beginning to build.
“Output price inflation rose for the first time in six months, with prices rising 2.9 per cent in the year to May compared with 2.5 per cent in April.
“Companies’ raw material costs jumped 9.2 per cent on the year.
“Some will say these figures add weight to the case for higher rates. But a slew of recent weaker data has dented expectations it will happen in August.
“Yesterday’s wage growth numbers were lower than expected, and data released on Monday showed manufacturing output dropped in April.”