UK inflation rises above Bank of England target in May, hits 2.1%
British consumer price inflation jumped to 2.1% in May, above the Bank of England’s 2.0% target and its highest since July 2019, official figures showed on Wednesday.
The acceleration of price growth from April’s 1.5% was driven in large part by the comparison effect with May 2020 when the country was in its first tight lockdown, especially for clothing, motor fuel, games and take-away food.
A Reuters poll of economists had pointed to a rise in inflation to 1.8%.
Core inflation, which excludes the price of food, energy and other volatile items, rose to2.0% in the 12 months to May, the Office for National Statistics said.
Investors around the world are trying to gauge the risks of a sustained jump in inflation, especially in the United States where annual inflation hit 5.0% in May, the highest in almost 13 years.
The BoE has said it expects inflation to hit 2.5% by the end of this year as the economy reopens after its coronavirus lockdowns and as global oil prices rise.
Governor Andrew Bailey and most colleagues say the increase in inflation will be temporary and does not require the central bank to scale back its huge stimulus programmes. It is expected to leave policy unchanged on June 24 after its latest meeting.
But Chief Economist Andy Haldane said last week that the BoE’s policymakers faced the “most dangerous moment” since 1992 when the government removed sterling from the European Exchange Rate Mechanism, a precursor to the euro.