Business

Inflation rate falls in May as travel price rises slow

Air fares in particular saw a significant unwinding, with April's 31.4 per cent price rise dropping to 13.3 per cent in the following month.

UK inflation cooled off in May as price rises for travellers slowed down during the lull after the Easter rush, new figures showed.

The Office for National Statistics (ONS) shows the Consumer Prices Index (CPI) fell to 2 per cent in May, down from 2.1 per cent in April.

The rate was in line with economist expectations and was also dead on the Bank of England's 2 per cent inflation target.

Mike Hardie, head of inflation at the ONS, said: "Inflation eased in May, as travel prices such as air fares fell back after their Easter highs in April. The overall rate of inflation has remained steady since the beginning of the year."

In April, Easter holiday getaways boosted prices for transport services by 10.4 per cent. This slowed to 3.9 per cent in May.

Air fares in particular saw a significant unwinding, with April's 31.4 per cent price rise dropping to 13.3 per cent in the following month.

Rail, road and sea transport also all showed smaller rates of growth last month.

But travellers faced climbing prices at hotels and hostels, with accommodation services rising 3.9 per cent on the year in May, compared to a 1.4 per cent increase in the prior month.

At the pumps, petrol prices were up 4.2p per litre to 128.3p. Diesel climbed 2.8p to 135.8p.

Upward pressure came from recreation and culture, especially the games, toys and hobbies category which includes video games. Prices for this sector were up 0.3 per cent on the year in May, compared to the previous month's 3.3 per cent dip.

Wine and beer also had a positive contribution, with beer recovering from April's 0.1 per cent price dip to rise 1.1 per cent while wine continued to become more expensive with a 2 per cent rise on the year.

However spirits declined 2.5 per cent, accelerating from a 0.2 per cent decrease in April.

The CPI, including owner-occupiers' housing costs (CPIH) - the ONS's preferred measure of inflation - was 1.9 per cent in May, down from 2 per cent in April.

The Retail Prices Index (RPI), a separate measure of inflation, was 3 per cent, unchanged from April.

The fall in the inflation rate comes as it was revealed UK house prices rose by 1.4 per cent in April, according to official figures.

The average UK house price was £229,000 in April, according to the figures released jointly by the Office for National Statistics (ONS), Land Registry and other bodies.

The weakest annual growth was in London, where prices fell by 1.2 per cent over the year. In the south east of England prices fell by 0.8 per cent.

By contrast, house prices in Wales increased by 6.7 per cent annually. In the north prices rose by 3.5 per cent to just below £135,000 (£134,811), while growth of 1.1 per cent and 1.6 per cent respectively was reported in England and Scotland respectively.

Enjoy reading the Irish News?

Subscribe from just £1 for the first month to get full access

Business

Today's horoscope

Horoscope


See a different horoscope: