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The Chancellor will be breathing a sigh of relief this morning as inflation holds steady. Figures just released by the Office for National Statistics (ONS) show that CPI in May remained at 2.8 per cent – the same as in April.
That news is welcome and goes against the grain of economic analysis, which had forecast a rise to 3 per cent. The fall in April was largely deemed to be artificial, thanks to last year’s massive increase in regulated and inflation-linked utility bills falling out of the series.
However, that did not come to pass. According to the ONS, a rise in transport costs, thanks to increased air fares, vehicle taxes and petrol prices, was offset by falling inflation in meat, dairy and vegetables, in what is surely welcome news for shoppers. Overall, food inflation fell from 3 per cent in April to 2.2 per cent last month, while the cost of domestic heating oil fell too.
Markets are far more effective than state intervention when it comes to protecting British shoppers
