UK Inflation Rate At Near 4-Year High Of 2.9%
Consumer prices in the United Kingdom increased 2.9 percent year-on-year in May of 2017, higher than 2.7 percent in April and above market expectations of 2.7 percent. It is the biggest inflation rate since June of 2013, driven by cost of games, toys, holidays abroad, food, clothing and electricity.
Year-on-year, prices increased faster for recreation and culture (2.3 percent from 1 percent in April); housing and utilities (2.1 percent from 1.6 percent); food and non-alcoholic beverages (2.1 percent from 1.5 percent); clothing and footwear (3.1 percent from 2.4 percent); furniture, household equipment and maintenance (2.4 percent from 1.7 percent) and alcoholic beverages and tobacco (4.9 percent from 4.4 percent). In contrast, the inflation was steady for restaurants and hotels (3.1 percent); miscellaneous goods and services (1.7 percent) and education (4.3 percent) and slowed for transport (4.7 percent from 6.4 percent) and communication (1.4 percent from 1.7 percent).
The core index which excludes prices of energy, food, alcohol and tobacco rose 2.6 percent year-on-year, the most since November of 2012 and above expectations of 2.4 percent.
On a monthly basis, consumer prices went up 0.3 percent, above forecasts of 0.2 percent but lower than 0.5 percent in April. The largest upward effect came from a variety of recreational and cultural goods and services with prices rising, overall, by 0.9 percent. Within this category the major contribution came from games, toys and hobbies, particularly computer games, data processing equipment and package holidays. Food prices rose slightly (0.2 percent), particularly sugar, jam, syrups, chocolate and confectionery. Prices for clothing rose by 0.6 percent, namely children’s clothing. Prices for furniture and household goods rose by 1.2 percent, mainly lounge furniture and household textiles. There was also a significant upward effect from electricity as further price increases entered the index in May. This is a part of the broader housing and household services heading within which the effect is partially offset by a downward contribution from owner occupiers’ housing costs. In contrast, the largest downward contribution this month came from the transport group (-0.7 percent), mainly motor fuels and transport services, particularly air and sea fares. Petrol and diesel prices each fell this year, by 1.0 and 1.6 pence per litre respectively. This is the third successive month of price falls.
ONS | Joana Taborda | joana.taborda@tradingeconomics.com
6/13/2017 8:57:45 AM