Bags of potatoes grown in the United Kingdom at the D & F McCarthy Ltd. fresh fruit and vegetable wholesaler in Norwich, UK, on Tuesday, Feb. 28, 2023. An acute shortage of salad items on UK supermarket shelves has sparked a political debate, with some people in the industry blaming Brexit while others say its a smokescreen for different problems. Photographer: Chris Ratcliffe/Bloomberg via Getty Images
Bloomberg | Bloomberg | Getty Images
The U.K.’s annual inflation rate hit 3.4% in May, in line with analyst expectations, according to data released by the Office for National Statistics (ONS) on Wednesday.
Core inflation, which excludes more volatile energy, food, alcohol and tobacco prices, rose by 3.5% in the year to May, down from 3.8% in the twelve months to April.
Inflation data is being closely watched by the Bank of England as it tries to determine the best course for interest rates amid a stubbornly high inflation rate and lackluster economic growth.
The central bank is widely expected to hold interest rates steady at its next meeting on Thursday, mindful of inflationary pressures. Economists expect policymakers to move to cut rates by 25 basis points at the next gathering in August, however.
The Bank of England said earlier this year that it expects the inflation rate to rise to 3.7% in the third quarter, before starting to cool into next year.
Consumer price inflation data out last month showed this trend could be emerging, with the inflation rate rising to 3.4% in the year to April as energy and household costs ramped up.
The ONS had initially published data showing a 3.5% increase, but later said a car tax data miscalculation had led to the print being overstated.
This breaking news story is being updated.
