The pressure on household finances from the rising cost of living did not ease last month, new figures from the Office for National Statistics (ONS) have revealed, as inflation remained higher than expected. Consumer Prices Index inflation stayed at 8.7% in May, the same level as in April, despite experts forecasting a fall to 8.4%.
It shows that people continue to face higher costs, and is also likely to put more pressure on the Bank of England to raise interest rates even further on Thursday.
The ONS said prices of plane tickets, entrance to live music venues, and computer games had particularly hit households during the month, meanwhile the price of petrol and diesel fell compared with a year ago.
ONS chief economist Grant Fitzner said: "After last month's fall, annual inflation was little changed in May and remains at a historically high level. The cost of air fares rose by more than a year ago and is at a higher level than usual for May.”
He continued: “Rising prices for second-hand cars, live music events and computer games also contributed to inflation remaining high. These were offset by a fall in the cost of petrol.
"Food price inflation remains high, but the rate has eased slightly this month with costs rising more slowly than this time last year."
The news is likely to put more pressure on interest rates too. Decision-makers at the Bank of England are meeting this week to look at rates.
The Bank is tasked with keeping inflation as close to 2% as it can, and the best tool it has to do that when inflation is high is by putting up interest rates. But this is likely to pile even more pressure on mortgage-holders as rates are already at close to 15-year highs.
Liberal Democrat Treasury spokeswoman Sarah Olney said: "These worse-than-expected figures show the Government is failing miserably to bring inflation down and provide relief for struggling families facing soaring bills.
"Home-owners now face the likelihood of even more interest rate hikes adding to their monthly mortgage payments, all while the Chancellor just sits on his hands."
Chancellor Jeremy Hunt said: "We know how much high inflation hurts families and businesses across the country, and our plan to halve the rate this year is the best way we can keep costs and interest rates down.
"We will not hesitate in our resolve to support the Bank of England as it seeks to squeeze inflation out of our economy, while also providing targeted support with the cost of living."
The ONS said the Consumer Prices Index including owner occupiers' housing costs (CPIH) rose to 7.9% in May, up from 7.8% in April.
The Retail Price Index (RPI), which is used to calculate the rise in train fares among other things, dropped from 11.4% in April to 11.3% in May.
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