Inflation remains static at 4.5%

In what will likely be seen as a further vindication of the Bank of England's wait-and-see strategy with interest rates, consumer price index (CPI) inflation remained unchanged overall in May at 4.5 per cent, according to Office of National Statistics (ONS) data released today (14 June).

However, despite the static figures, the ONS said there were significant upward and downward pressures at the more detailed level compared with the previous month.

By far the largest downward pressure to the change in CPI inflation came from transport services, with the ONS claiming that the timing of Easter in 2011 had a significant impact on the April figures for air transport, sea transport and international rail travel.

A further large downward pressure came from furniture, household equipment and maintenance, where prices rose overall by 0.4 per cent between April and May this year compared with a rise of 1.2 per cent a year ago.

However, by far the largest offsetting upward pressure to the change in CPI inflation came from food and non-alcoholic beverages, where prices rose by 1.3 per cent between April and May this year but fell by 0.1 per cent between the same two months a year ago.

Further upward effects came from a wide range of product groups, most notably from fruit and meat.

In the year to May, retail price index (RPI) annual inflation was 5.2 per cent, unchanged from April, with the the ONS saying that the main factors affecting CPI are also affected RPI.

The CPI shows that the UK inflation rate in April was above the provisional figure for the European Union. The UK rate was 4.5 per cent whereas the EU's as a whole was 3.2 per cent.