CPI falls to Bank of England target in May, Bank interest rate held

Published 27 June 19

In May 2019, the UK consumer price index (CPI) fell from 2.1% in April to 2.0%. The slight decline was a result of lower transport costs, particularly lower air fares, as well as lower car prices.

Food prices increased. While there was no change in bread and cereals prices compared with May 2018, meat and dairy prices were higher.

Unsurprisingly, at the Monetary Policy Committee meeting on 20 June, there was a unanimous decision to maintain the Bank of England interest rate at 0.75%. In light of the current Conservative leadership contest, the likelihood of a ‘no-deal’ Brexit has increased and subsequently downside risks to the economy are higher. Forward interest rates have moved lower and GDP in Q2 2019 is expected to be flat, after growing by 0.5% in Q1 2019.