THE UK’s rate of inflation fell in May.
The Office for National Statistics (ONS) said the Consumer Price Index (CPI) measured 3.4% in the 12 months to May.
In the previous month inflation sat at 3.5% while in March it was 2.6%.
Commenting on the figures, acting chief economist at the Office for National Statistics Richard Heys said: “A variety of counteracting price movements meant inflation was little changed in May.
“Air fares fell this month, compared with a large rise at the same time last year, as the timing of Easter and school holidays affected pricing.
“Meanwhile, motor fuel costs also saw a drop.”
He added that these were partially offset by rising food prices, particularly items such as chocolates and meat products.
The cost of furniture and household goods, including fridge freezers and vacuum cleaners also increased, he confirmed.
The news comes ahead of the Bank of England‘s interest rate decision on Thursday, where it will decide whether to hold or cut rates.
Why does inflation matter?
INFLATION is a measure of the cost of living. It looks at how much the price of goods, such as food or televisions, and services, such as haircuts or train tickets, has changed over time.
Usually people measure inflation by comparing the cost of things today with how much they cost a year ago. The average increase in prices is known as the inflation rate.
The government sets an inflation target of 2%.
If inflation is too high or it moves around a lot, the Bank of England says it is hard for businesses to set the right prices and for people to plan their spending.
High inflation rates also means people are having to spend more, while savings are likely to be eroded as the cost of goods is more than the interest we’re earning.
Low inflation, on the other hand, means lower prices and a greater likelihood of interest rates on savings beating the inflation rate.
But if inflation is too low some people may put off spending because they expect prices to fall. And if everybody reduced their spending then companies could fail and people might lose their jobs.
See our UK inflation guide and our Is low inflation good? guide for more information.
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