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Financial News: UK Inflation Eases To 2% Target

UK Inflation Eases To 2% Target

06/19/2024 - 02:48:00 (RTTNews)

(RTTNews) - Ahead of the general election, UK consumer price inflation eased to the 2 percent target for the first time in nearly three years.

Consumer price inflation softened to 2.0 percent in May, as expected, from 2.3 percent in April, data from the Office for National Statistics showed on Wednesday. Inflation reached the target for the first time since July 2021.

On a monthly basis, consumer prices gained 0.3 percent in May, the same rate as seen in April. Prices were expected to climb 0.4 percent.

Excluding energy, food, alcohol and tobacco, core inflation decelerated to 3.5 percent from 3.9 percent. The figure came in line with expectations.

Despite the slowdown, services inflation remained high at 5.7 percent compared to 5.9 percent in April. By contrast, goods prices posted an annual fall of 1.3 percent.

Capital Economics' economist Ruth Gregory said the fall in inflation to 2.0 percent in May probably won't be enough to persuade the Bank of England to cut interest rates from 5.25 percent tomorrow.

The <a href=https://www.rttnews.com/3446740/bank-of-england-moves-closer-to-rate-cut.aspx target=_blank >BoE </a>had kept the interest rate unchanged over the last six straight meetings. The current 5.25 percent is the highest since early 2008.

Another data from the ONS showed that factory gate prices rose 1.7 percent year-on-year in May, up from an increase of 1.1 percent in April.

Meanwhile, monthly output prices fell unexpectedly by 0.1 percent in May, following a revised monthly inflation rate of 0.3 percent in April. Economists had forecast a 0.1 percent increase.

At the same time, input prices edged down 0.1 percent on year in May, compared to a revised fall of 1.4 percent in April. Month-on-month, input prices were unchanged between April and May, after a revised monthly inflation rate of 0.8 percent in April, the ONS said.

The ONS said the annual inflation rates for both input and output PPI are at their highest levels since May 2023.

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