British inflation rate rises to 4-year high of 2.9 pct

Nearly a year later, the latest data for May from the Office for National Statistics shows that rate has surged to 2.1%, the highest since November 2013.

While vegetable prices in May fell by 13.44 percent as compared with past year, pulses recorded a sharper drop of 19.44 percent.

United Kingdom inflation accelerated unexpectedly in May and factory gate prices continued to increase, figures from the Office for National Statistics showed Tuesday.

Inflation in the United Kingdom rose to 2.9% in May, up from 2.7% in April and just 0.3% a year ago, the Office for National Statistics (ONS) has revealed.

"There were smaller upward contributions from increased electricity and food prices".

Meanwhile, the FTSE 100 traded 0.03 percent or 2.62 points lower at 7,509.00 by 11:10 GMT, while at 11:00GMT, the FxWirePro's Hourly Pound Strength Index remained neutral at -30.26 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend).

It will also be welcome news to Bank of England, which tries to keep inflation close to 2 percent.

While the finance ministry was not happy with the status quo on interest rates by the RBI, it is expected that the central bank will go for a rate if the consumer prices remain subdued in the coming months. "However, growth is expected to pick up somewhat in the second quarter, and it looks like the election result could make for a "softer" Brexit, which could prove positive for the economy" says Ben Brettell, senior economist at Hargreaves Lansdown.

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'Hitting its highest level since June 2013 was a surprise but it seems much of the inflationary pressure in the system has now been washed through, ' he said.

Today's inflation rate means there is growing "clear blue water" between the rising cost of living and wage growth of just 2.1 per cent, according to the most recent Government figures.

Similarly, mining sector output grew at 4.2 percent during the month under review compared to 6.7 year ago.

He said: "After rising unexpectedly in May, we think that CPI inflation is now not far away from its peak". Core inflation is what economists see as a "permanent" influences on price - not those they consider "transitory" or "fleeting" - and does not include energy and food prices.

Clothing, housing, fuel, and light also saw lower inflation rate in May while prices of vegetables declined by 13.44 percent and that of pulses and products by 19.45 percent. That boosted expectations the Reserve Bank of India (RBI) could cut rate interest rate at its next policy meet in August.

  • Zachary Reyes