UK inflation up more than expected amid COVID fluctuations

Business News

People sit at outdoor tables at a restaurant in Soho, in London, Monday, June 14, 2021. British Prime Minister Boris Johnson is expected to confirm Monday that the next planned relaxation of coronavirus restrictions in England will be delayed as a result of the spread of the delta variant first identified in India. (AP Photo/Alberto Pezzali)

LONDON (AP) — British consumer prices rose by more than expected last month as fuel and clothing costs surged following the easing of COVID-19 restrictions.

Inflation accelerated to 2.1% in the 12 months through May from 1.5% in April, the Office for National Statistics said Wednesday. That was higher than the 1.8% rate economists had forecast.

While the inflation rate topped the Bank of England’s 2% target for the first time since July 2019, economists said the bank’s Monetary Policy Committee was unlikely to raise interest rates any time soon.

A strengthening pound and adequate labor supply are likely to keep inflation under control, said Samuel Tombs, chief economist at Pantheon Macroeconomics in London. The inflation will probably peak at around 2.8% later this year before returning to the 2% target by the middle of 2022, he said in a note to clients.

“Accordingly, we still think that the MPC will not need to raise Bank Rate until the second half of 2023,” Tombs said.

Much of the inflationary pressure in May was due to price fluctuations caused by the coronavirus pandemic. Fuel and clothing prices dropped a year ago when Britain’s first national lockdown reduced consumer demand, then rose again in May as restrictions imposed during a third lockdown were eased.

Gasoline prices averaged 127.2 pence ($1.79) per liter last month, almost 20% higher than a year earlier, the ONS said.

___

Follow all of AP’s stories on the pandemic at https://apnews.com/hub/coronavirus-pandemic

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Trending Stories

Trending now

Upcoming Events

Stay Connected