UK Inflation Rate Steady at 0.3%


Consumer prices in the United Kingdom increased 0.3 percent year-on-year in May of 2016, the same as in April and below market expectations of a 0.4 percent increase. Transport prices declined less while food deflation deepened.

Year-on-year, transport prices fell at a slower 1 percent (-1.3 percent in April); cost of housing and utilities was flat (-0.1 percent in April) and cost of restaurants and hotels rose at a faster pace (2.6 percent from 2.3 percent). In contrast, prices of recreation and culture increased less (0.1 percent following a 0.4 percent rise in April) and food deflation deepened (-2.8 percent from -2.5 percent in April).

On a monthly basis, consumer prices grew at a faster 0.2 percent, following a 0.1 percent increase in April. Main upward contribution came from transport (prices up 0.9 percent), mainly due to motor fuels, where diesel prices rose by 3.0 pence per litre and sea fares. The overall upward contribution was partially offset by a downward effect from air fares. Cost of restaurants and hotels rose 0.5 percent, boosted by accommodation services namely hotel overnight. Communication prices increased 0.9 percent principally from bundled telecommunication services and mobile phone applications. Cost of miscellaneous goods and services edged up 0.1 percent, mainly due to insurance prices.

In contrast, downward contribution came from prices of clothing and footwear (-0.2 percent), namely children’s outerwear. Cost of recreation and culture fell 0.4 percent, mainly due to games, toys and hobbies (particularly computer games), partially offset by an upward effect from data processing equipment. In addition, prices of food and non-alcoholic beverages declined 0.4 percent, namely vegetables and confectionery.

The core index which excludes prices of energy, food, alcohol and tobacco edged up 0.2 percent on the month and gained 1.2 percent on the year.


ONS | Joana Taborda | joana.taborda@tradingeconomics.com
6/14/2016 9:59:55 AM