Inflation in the United Kingdom (U.K.) exceeded expectations in May as core consumer prices rose an annualized 7.1%, up from 6.8% in April of this year.
In the U.K., core inflation excludes volatile food, alcohol, tobacco, and energy prices. The May increase has shocked many economists who were calling for consumer prices to decelerate during the month.
Headline inflation that includes food, alcohol, tobacco and energy costs rose by an annual 8.7% in May, unchanged from April.
Economists polled by the Reuters News Agency had expected total inflation in the U.K. to decline to an annualized rate of 8.4% in May.
The Consumer Prices Index (CPI) that also includes housing costs, the British government’s preferred statistic, rose an annualized 7.9% in May, up from 7.8% in April.
Inflation in the U.K. remains significantly higher than the Bank of England’s 2% target.
The British central bank is widely expected to implement its 13th consecutive interest rate hike on June 22 as it struggles to lower inflation without creating a mortgage crisis or pushing the economy into a recession.
The Organization for Economic Cooperation and Development (OECD) recently forecast that the U.K. will end the year with headline inflation at 6.9%, the highest level among leading industrialized nations.
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