UK inflation remains high

To the surprise of analysts, inflation in the UK did not fall in May. On the contrary, consumer prices as a whole increased as in April by 8.7 per cent compared with the same month in the previous year. Economists had been expecting to see the rate drop back to 8.4 per cent. In a monthly comparison, the cost of living rose by 0.7 per cent, thus more than expected.

The core inflation rate also increased unexpectedly from 6.8 to 7.1 per cent, and in May reached the highest rate since March 1992. Core inflation is regarded by experts as the more reliable indicator when considering the underlying price trend.