U.K. inflation rose less than predicted in May as rising transport costs were offset by falls in the price of clothing and food.
The Consumer Price Index, which measures inflation rate was 0.3 percent in May, according to the Office for National Statistics on Tuesday, same as what was obtained in April but less than the 0.4 percent forecast by economists. Also, core inflation, excluding energy prices and volatile food remained at 1.2 percent.
Inflation was boosted last month by the increase in transport costs as motor fuel prices surged 2.7 percent compared with 1.9 percent a year earlier. Sea fares rose 0.1 percent, in contrast to the 6.4 percent decline a year earlier. There were also influences from restaurant and hotel bills and the price of telecommunication services.
While downward pressure came from food and non-alcoholic drinks, which fell 0.4 percent, and from clothing, which declined 0.2 percent compared with a 0.5 percent gain a year earlier. It suggests competition is forcing retailers to absorb higher costs caused by a higher minimum wage and the impact of a weaker pound on import prices. Prices of games, toys and hobbies also fell, the ONS said. Overall, consumer prices rose 0.2 percent on the month.
The pound decline 1 percent to $1.4132 as of 9:46 a.m. London time.