UK inflation dips to Bank of England target

People walk past the Bank of England, in London, August 1, 2018. — Reuters pic
People walk past the Bank of England, in London, August 1, 2018. — Reuters pic

LONDON, June 19 — British annual inflation has dipped to the Bank of England’s 2.0 target rate, official data showed today, further cementing expectations that the BoE will maintain low UK interest rates.

“The Consumer Prices Index (CPI) 12-month rate was 2.0 per cent in May 2019, down from 2.1 per cent in April 2019,” the Office for National Statistics said in a statement.

“Falling fares for transport services... and falling car prices produced the largest downward contributions to the change in the rate,” the ONS added.

The data comes before the Bank of England’s Monetary Policy Committee (MPC) tomorrow announces its latest interest-rate decision, with markets widely expecting it to keep borrowing costs at 0.75 per cent amid Brexit uncertainty.

In the background, the Federal Reserve and European Central Bank are each talking up the prospect of cuts to US and eurozone interest rates amid weaker global growth.

Today’s British data meanwhile showed that “CPI inflation fell for the first time in four months”, noted Ruth Gregory, senior UK economist at Capital Economics research group.

While expecting that “inflation will drift” higher later in the year, “for now, the rationale for the MPC to keep rates on hold... just got a bit stronger”, she added. — AFP

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