Consumer price inflation stuck at 8.7% in May, defying expectations of a slowdown and making a further rise in UK interest rates inevitable.
The May figures came out the day before the Bank of England’s Monetary Policy Committee (MPC) was due to meet to discuss changing the UK base rate. This sets the interest rates for borrowing by the government, businesses and banks – who then feed any increases through to borrowers such as people with mortgages.
A 13th consecutive rise in June had been expected for some time, because the headline rate of inflation has been well above its medium-term 2% target since mid-2021. At the risk of being accused of derailing the UK’s post-COVID economic recovery, MPC members’ main decision at the most recent meeting was not whether or not to hike rates, but by how much.
