UK Inflation Slows in May

U.K. inflation slowed in May to 3.4 percent for the first time in three months as lower costs of items from food to transport eased price pressures in the economy.

Consumer prices rose 3.4 percent from a year earlier, compared with 3.7 percent in April, the Office for National Statistics said. Inflation has now exceeded the government’s 3 percent upper limit for three months. On the month, consumer prices climbed 0.2 percent.

The Bank of England last week kept up its emergency stimulus for the economy to counter the drag on prices from the aftermath of the recession.

Lower prices of food, transport, alcohol, tobacco and recreation offset higher fuel costs in May. Gasoline prices rose to 120.5 pence ($1.78) per liter in the month, the highest since records began in 1996, the statistics office said.

Core inflation, which excludes the cost of food, tobacco, alcohol and energy prices, slowed to 2.9 percent from 3.1 percent the previous month.

Consumers’ expectations for price increases in the coming year rose to the highest since 2008 in May, a quarterly Bank of England survey showed. Britons predicted inflation of 3.3 percent in the next 12 months, up from 2.5 percent in February.

Retail price inflation, a measure of living costs used in wage negotiations, slowed to 5.1 percent in May from 5.3 percent the previous month, the statistics office said. Excluding mortgage-interest payments it was also 5.1 percent, down from 5.4 percent.

UK Inflation Slows in May, Bloomberg
6/15/2010 9:52:04 AM