UK inflation holds steady at 4.5%

Food and fuel prices continued to be the main contributors to the high inflation rate

The UK Consumer Prices Index (CPI) annual rate of inflation held steady in May at 4.5%.

The Retail Prices Index (RPI) measure of inflation – which includes mortgage interest payments – was also unchanged at 5.2%, according to the Office for National Statistics (ONS).

Fuel and food prices continued to be the main contributors, with both components up 1.3% from April.

Air transport costs fell sharply in the month as Easter peak fares ended.

However, over the course of the past 12 months, alcoholic beverages and tobacco recorded a 9.8% increase – the highest year-on-year rise on record – thanks in part to the VAT rise.

Fuel prices also accelerated, up 13.7% compared with a year ago.

The overall inflation figure was in line with market expectations.

It follows a rise to 4.5% in April – the highest inflation rate since October 2008 – from 4% in March.

The Bank of England expects CPI inflation to rise above 5% in the next three months, well above its 2% target.

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