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Further slowdown in UK inflation Further slowdown in UK inflation
(41 minutes later)
UK annual inflation slowed again in May as the Consumer Prices Index (CPI) fell to 2.2% from 2.3% in April, the Office for National Statistics (ONS) said.UK annual inflation slowed again in May as the Consumer Prices Index (CPI) fell to 2.2% from 2.3% in April, the Office for National Statistics (ONS) said.
The small decline means the figure remains above the Bank of England's target of 2%.The small decline means the figure remains above the Bank of England's target of 2%.
The annual inflation reading was the lowest since January 2008.The annual inflation reading was the lowest since January 2008.
Another inflation measure, the Retail Prices Index (RPI), which includes mortgage interest payments and housing costs, moved to -1.1% from -1.2%. Another inflation measure, the Retail Prices Index (RPI), which includes mortgage interest payments and housing costs moved to -1.1% from -1.2%.
The fall in the CPI figure was much less than analysts had predicted. Deflation under the RPI measure eased slightly, due to a slight rise in average mortgage interest payments. The RPI rate is used by many companies as the starting point for wage bargaining
Meanwhile, the slowdown in the CPI figure was much less than analysts had predicted.
It means the CPI measure has now been above the Bank's target for 20 months, but it forecasts inflation is set to fall to 1% or lower later this year.It means the CPI measure has now been above the Bank's target for 20 months, but it forecasts inflation is set to fall to 1% or lower later this year.
The rising cost of food and energy has slowed. Electricity bills fell this year compared with unchanged prices a year ago, the ONS said. Clothes and footwear
The rise in the cost of food and energy has slowed. Electricity bills fell this year compared with unchanged prices a year ago, the ONS said.
However, as well as tax rises on alcohol and tobacco in this year's Budget, the other main inflationary influences were from rising prices of DVDs, televisions, clothing and footwear.However, as well as tax rises on alcohol and tobacco in this year's Budget, the other main inflationary influences were from rising prices of DVDs, televisions, clothing and footwear.
After the inflation news sterling hit a session high against the dollar and moved close to its highest level for the year against the euro.
Sterling moved to a session high of $1.6414 against the dollar, up 0.6% on the day. The euro fell as low as 84.47 pence, close to Monday's 2009 low of 84.45 pence.