Consumer Prices Index (CPI) sticks at 2.4% in May - https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/may2018
Weak pound and rising oil price likely to stoke inflation higher
Rising prices weaken spending power of earnings and savings
Kevin Doran, chief investment officer at AJ Bell, comments
“The Bank of England will be disappointed to see inflation holding firm at 2.4%, some way above its 2% target. The Monetary Policy Committee unanimously decided against an interest rate rise in May and will now be watching inflation very closely to see if this is a temporary blip in the downward trend or if it starts going up again.
“The rising oil price and recent weakness in the pound are unlikely to help here. The jump in the oil price has started to hit petrol pumps, pushing up costs for UK consumers and businesses alike. In addition, the weak pound will be driving up input costs for many UK companies which will ultimately filter through to UK consumers in the coming months.
“If inflation continues to hold firm or even increases, UK consumers will once again start to feel the pinch. Wage growth, including bonuses, is currently only marginally ahead of inflation at 2.5% and interest rates on cash savings remain rock bottom so rising prices will weaken the spending power of both earnings and savings.”