MNI DATA IMPACT: UK CPI Dips To Near-Four Year Low In May

--Lower Prices To Ease Argument For BOE Doves As MPC Meets

By Laurie Laird

     LONDON (MNI) - UK inflation fell to its lowest level in nearly four years

in May, the tenth straight month below target, providing fuel -- if needed --

for Bank of England doves as the Monetary Policy Committee meets.

     The following are the main points from the May report on consumer and

producer prices released on Wednesday by the Office for National Statistics.

     --CPI fell to an annual rate of 0.5%, down from 0.8% in April, the lowest

level since June 2015, with a plunge in motor fuel accounting for nearly half of

the change in CPI.

     --Fuels and lubricants plunged by a record-high 16.7% last month -- a

series dating back to 1997 -- as crude oil prices declined by an annual rate of

61.7% in May, also a record fall. Petrol prices averaged 106.2 pence per litre,

the lowest level since April 2016.

     --That leaves inflation more than 1% below the Bank of England's 2.0%

target for the second straight month, necessitating an exchange of letters

between Governor Andrew Bailey and the Chancellor of the Exchequer, Rishi Sunak.

     - Excluding petrol prices, core inflation declined to an annual rate of

1.2%, with no items showing evidence of significant upward pressure, save a

modest increase in food prices, which added 0.04 percentage points to the change

in CPI.

     - The Bank of England received the inflation data on Monday, with the

current "special circumstances" allowing the ONS to deviate from pre-release

distribution guidelines, according to an official.

     - Excluding hard-to-price items, CPI fell to an annual rate of 0.4% from

0.5% in April. Some 74 items were unavailable last month, down from 98 in April,

according to a statistician.

     - Intermediate inflation was ravaged by the lurch in the crude oil market.

Input PPI plunged by an annual rate of 10.0%, extending a 10.2% slump in April.

Output PPI declined by an annual pace of 1.4%, the biggest fall since December

of 2015.

     - Pipeline prices remain subdued, even allowing for the volatility in oil.

Core output PPI rose by just 0.6% in the year to May, down from 0.7% in April,

remaining below 1.0% for the sixth consecutive month.

     - RPI slumped to an annual rate of 1.0% in May from 1.5% in April, the

lowest level since October 2015, while RPIX rose by 1.3%, the slowest pace since

December of 2015.

     -London bureau: 44 (0) 203 865 3812; email: ukeditorial@marketnews.com

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--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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