Consumer prices rose a marginally firmer than expected 0.4 percent on the month in May. However, this left the annual inflation rate unchanged at 2.4 percent, matching its weakest print since March 2017.
Indeed, the only major push to the change in the annual rate came from transport where a record monthly jump saw petrol prices climb to their highest level since October 2014. A partial offset was provided by recreational and cultural goods and services where charges were up 0.1 percent on the month versus a 0.9 percent spike over the same period in 2017. Electricity (0.1 percent after 4.0 percent) also had a negative impact.
As a result, the core CPI rose a smaller 0.3 percent on the month which saw its yearly rate flat at 2.1 percent.
Today's inflation update does little to boost the chances of a hike in Bank Rate in August and certainly should have minimal impact on next week's MPC deliberations. Headline inflation has been above its 2 percent target for some fifteen months now but recent news has been quite favourable and with growth sluggish, any near-term monetary tightening could prove both premature and dangerous.