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U.K. inflation comes in lower than expected in May

Investing.com -

Investing.com - Consumer price inflation (CPI) in the U.K. came in lower than forecast in May, putting pressure on the Bank of England's (BoE) monetary policy, official data showed on Tuesday.

In a report, the U.K. Office for National Statistics (ONS) said the rate of consumer price inflation rose by a seasonally adjusted 0.3% last month compared to the year before. That was below forecasts for it to rise to 0.4% from April's reading of 0.3%.

Month-over- month, consumer price inflation rose by a seasonally adjusted 0.2% last month, below forecasts for it to rise to 0.3% from April's reading of 0.1%.

Bank of England Governor Mark Carney will now have to write an open letter to the Chancellor of the Exchequer, George Osborne, as inflation is more than a percentage point below the central bank's target of 2.0%.

Core CPI, which excludes food, energy, alcohol, and tobacco costs rose at a seasonally adjusted rate of 1.2% last month, in line with April's reading and below forecasts that were looking for a gain of 1.3%.

The retail price index increased 1.4% in May, in line with forecasts and slightly higher than April's reading of 1.3%.

The data also showed that the house price index rose 8.25% in May, following a 8.5% increase in the prior month.

In an immediate reaction, GBP/USD traded at 1.4131 from around 1.4149 ahead of the release of the data, while EUR/GBP was at 0.7948 from 0.7949 earlier.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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