Inflation fell to 1.5 percent in the UK last month, the lowest it’s been in nearly five years, according to the Office for National Statistics (ONS). This was the sixth consecutive month the country’s inflation rate has been below the Bank of England’s 2-percent target. Lower food and airline ticket prices helped drive down inflation. Prices for food and non-alcoholic beverages dropped by 0.6 percent y-o-y in May, according to the ONS, marking the sharpest drop in 10 years. The news comes a week after the ONS reported a 6.6-percent fall in unemployment.
Some local analysts expect inflation to remain below the 2-percent level for the rest of the year. “This is very good news for consumers’ purchasing power and it also affords the Bank of England flexibility, as it toys with the idea of raising interest rates before the end of 2014,” Howard Archer, the chief European economist at IHS Global Insight, was quoted as saying by the BBC.
