As prices rose in May for the first time since October thanks to a rise in transport costs, the UK has rebounded from its dip into inflation last month, official data showed. April saw annual consumer price inflation (CPI) in the UK fall below zero for the first time since the 1960s, according to the Office for National Statistics, which said its consumer price index measure of inflation fell 0.1 per cent in April.
But May's figures showed prices clawed back from April's lows, with consumer prices climbing 0.1 per cent in the 12 months to May as airfares rose this year, but fell a year ago. The rise in the cost of air travel between April and May varies significantly year on year, with the timing of Easter seen as a likely factor.
Motor fuels were also a major contributor to the rise seen in May this year, with average petrol prices rising by 2.5 pence per litre between April and May this year compared with a smaller rise of 0.4 pence per litre a year earlier.
Food prices, notably vegetables, bread, sugar and confectionery fell slightly between April and May. However, the largest downward contribution came from recreational goods like games, toys and computer games, which fell 0.1 per cent, compared to a 0.4 per cent rise between the same two months last year.
With wage growth showing signs of reviving and upward revisions to recent economic growth data, pressure will gain on the Bank of England to consider the timing of an interest rate rise. However, inflation is still way below the central bank's target of 2 per cent.
"The outlook for inflation still looks benign, and the bank's 2 per cent target remains a long way off," Markit Chief Economist Chris Williamson said.
"Importantly, the recent strengthening of sterling, which has the effect of reducing the cost of imports, will help offset the oil impact. The bank will also be in no rush to start raising interest rates merely on the back of higher oil prices and policymakers will want to see evidence that core inflation and wages are showing more convincing upturns."
