The UK's inflation rate posted another surprise drop in May, falling to 2.8%, as the lack of activity in the UK continues to bring prices down sharply.
While many economists had expected the Consumer Prices Index (CPI) to hold at 3% in May, after the steep drop in April's reading, the fall in prices shows no sign of letting up as yet.
The largest downward pressures to the change in CPI annual inflation in May came from motor fuels and food and non-alcoholic beverages, according to the Office for National Statistics (ONS).
While the largest upward pressures to the change in CPI annual inflation came from air and sea transport, where the timing of Easter had a significant impact on the April to May movement. The CPI stands at 122.8 in May 2012.
Retail Prices Index (RPI) annual inflation stands at 3.1% in May 2012, down from 3.5% in April. The largest downward pressures to this change came from petrol and oil and food. Partially offsetting these was an upward pressure from other travel costs which includes air transport. The RPI stands at 242.4 in May 2012.
The unexpected fall comes after last month's inflation figure posted a surprise fall from 3.5% to 3% beating consensus forecasts, and leaving inflation at its lowest level since February 2010.
At the same time the RPI inflation slowed from 3.6% to 3.5%, against a 3.4% consensus forecast.
Inflation has fallen from 5.3% last September due to the slowing impact of the VAT hike at the start of 2011, in addition to falling energy, food and commodity prices, together with bill cuts from utility providers.
Further inflation declines will encourage the Bank of England to inject more emergency cash into the economy through its quantitative easing programme, as the eurozone crisis continues to threaten the UK's economic recovery.
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