Underlying inflation in Britain is expected to have fallen sharply in May, pushed lower by the effect of unusually high food and petrol prices a year ago, but is likely to pick up later in the year, analysts said today.
A Reuters poll of 15 economists forecast underlying annual inflation (RPIX), which strips out the price of home loans, would fall back to 2.0 per cent in May, from 2.3 per cent in April.
That figure is well below the Bank of England's government-set target of 2.5 per cent, and could reduce the pressure on the Bank of Eengland's Monetary Policy Committee to hike rates as soon as July.
Prices were forecast to rise 0.4 per cent on the month in May after a 0.7 percent increase in April.
In May 2001 food prices rose 13 per cent month on month due to bad weather for crops, a factor one economist said could slice 0.2-0.3 percentage points off this May's year-on-year underlying inflation.
Petrol prices also rose last May by almost three per cent.
