UK inflation holds steady at 2.4 percent

UK inflation unexpectedly remained at 2.4 percent in May, despite petrol hitting a three-year high.

The latest consumer prices index (CPI) remained at 2.4 percent for the second consecutive month, according to the Office for National Statistics (ONS).

This went against economists predictions of the rate to hit 2.6 percent amid rising oil prices globally.

The ONS revealed that the average cost of petrol rose by 4.6 pence a litre between April and May to 125.3 pence last month, marking the highest level since October 2014.

Overall, the falling price of computer games, sweets and chocolate helped to offset the rising price of petrol for consumers.

Commenting on the effect of computer games, the ONS said: “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 news helped to send the pound lower to $1.3321, down 0.37 per cent on the day, as traders backed away from the possibility of an imminent interest rate hike from the Bank of England (BoE).

The BoE monetary policy committee is set to meet next month to consider the latest figures.

Tom Stevenson, investment director for Personal Investing at Fidelity International, said that the weakness of the economy should have prompted the BoE to look towards raising rates.

“With UK CPI stuck at 2.4% despite rising petrol prices and higher airfares, the release confirms the underlying weakness of the UK economy. Today’s data follows yesterday’s lower than expected wage growth and Monday’s weak manufacturing data.”, Stevenson commented.

UK inflation has been steadily on the increase over the course of the past year, with inflation hitting a near six-year high back in November of 2017.

The rise in 2017 was in part due to the fall in the value of the pound following the Brexit referendum, which pushed up the prices of imported goods.