U.K. Inflation remains at 4.5%, could be heading for 5.5%
The Consumer Prices Index rate of inflation held firm at 4.5 per cent last month, despite hopes for a slight dip.
The Office for National Statistics confirmed the figure for May remained unchanged from April. The figure is well above the Bank of England's official two per cent target.
The rising cost of food, tobacco, alcohol and fuel all helped keep inflation high, the ONS said.
The BoE has been condemned for consistently refusing to raise rates in the face of inflation, however analysts believe that a rate rise may be on the cards in August.
The ONS said that the Retail Prices Index rate of inflation, which includes mortgage interest payments, was also unchanged at 5.2 per cent.
Jonathan Loynes, Chief European Economist at Capital Economics, commented, "May's UK consumer prices figures, showing the headline rate steady at 4.5%, are in line with the median forecast but disappointed our own hopes for a small fall.
"Not only did transport inflation (airfares in particular) not fall all the way back after last month's Easter-related jump, but food price inflation also rose a bit more sharply than we had expected. Further rises in the latter, along with recently announced further energy price hikes, are likely to take the headline inflation rate above 5%, and perhaps even above 5.5%, by late summer.
"But thereafter, we still believe that inflation will drop back sharply as food, energy and VAT effects start to fade and weak activity, spare capacity, slow wages growth and weak money growth bring core inflation back down. With recent signs that inflation expectations are falling, the MPC should continue to hold its nerve and leave interest rates unchanged.
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