The drop in inflation to 2.4% in April was, it seems, a blip. The rate rose to 2.7% in May, in line with its remarkably stable rate between October and March. This is disappointing, given that it is the last inflation number to be published in Sir Mervyn King’s tenure as governor. The pattern of above-target inflation of the past few years persists and it will be some time before the 2% target comes back into sight.
I have noticed petrol and diesel prices creeping back up and so has the Office for National Statistics. This, together with higher air fares and clothing prices pushed up inflation, which rose on all measures.
CPIH (the consumer prices index including housing costs) rose from 2.2% to 2.5%. RPI inflation rose from 2.9% to 3.1%, while the new RPIJ measure – J is for Jevons – went up from 2.3% to 2.5%.
The key question for June is whether CPI inflation can remain below the “letter-writing” range (i.e. below 3.1%, sparing Mark Carney the embarrassment of having to explain an overshoot. More details on today’s numbers here.
Britain does not have much of an inflation problem, if the output price data are anything to go by. Factory gate prices rose by just 1.2% in the 12 months to May. But consumer price inflation remains uncomfortably high.
This piece is cross-posted from David Smith’s Economics UK with permission