“May’s dismally modest drop is unlikely to quell concerns over inflation, as it owed more to the unwinding of distortions caused by Easter falling in April this year, particularly on services prices, than a telling reduction in cost pressures.
“UK inflation is facing a turbulent summer with the fallout from ‘awful April’ and growing global volatility likely to lift it moderately higher from here, despite lower energy bills from July and a weaker economy.
“The current geopolitical instability is a double-edged sword for inflation because while it may mean a protracted period of higher fuel costs, it could also accelerate the downward pressure on pricing as demand falls in response to these headwinds.
“An interest rate cut on Thursday looks implausible as rate setters will probably want to hold off until August to get a better understanding of the impact of this global uncertainty before taking the plunge once again.”
ENDS
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