British consumer price inflation held at an annual rate of 2.4% in May, its joint-lowest since March 2017, the Office for National Statistics said on Wednesday, below market forecasts of a small rise to 2.5%.

The Bank of England said last month that it expected inflation to rise over the coming months due to higher oil prices and energy bills, before resuming a steady decline towards its 2% target.

Consumer spending - typically the biggest driver of British economic growth - has been heavily squeezed over the past year by inflation above the BoE's 2% target.

Wednesday's data suggest a rise in inflation could well be on its way. Fuel prices increased by the biggest monthly amount since January 2011, up 3.8%. However, this increase was offset by a drop in the cost of computer games - which are typically volatile - and smaller rises in energy bills than a year earlier.

Inflation hit a five-year high of 3.1% in November, when the inflationary effect of the pound's tumble after June 2016's Brexit vote reached its peak.

The BoE raised its key interest rate for the first time since before the 2008 financial crisis in November, but weak first-quarter growth caused it to postpone a rate rise which had been widely expected for May. Now the market expects a move in August, though soft April data on wages and industrial output have caused some to have doubts.

The Office for National Statistics’ figures suggested a sharp rise in short-term pressures in the pipeline for consumer prices.

Among manufacturers, the cost of raw materials was 9.2% higher than in May 2017, boosted by a 2.8% increase on the month, the biggest monthly jump since October 2016. The market had expected input prices to rise by 7.6%.

Manufacturers increased the prices they charged by 2.9%, in line with market forecasts and the biggest rise since December.

The Office for National Statistics also said house prices in April rose by an annual 3.9% across the United Kingdom as a whole compared with 4.2% in March, the weakest increase in just over a year. Prices in London alone rose by 1.0% after edging down in March. is an independent macroeconomic consultancy with thousands of subscribers all over the world. We provide fundamental research to help our clients make better investing decisions. Our subscribers should expect to get access to:

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