Inflation across the United Kingdom rose unexpectedly above the target set by the Bank of England (BoE) in May as it reached 2.1%, part of the post-close price hike that is expected to pick up.
The CPI’s acceleration from 1.5% in April largely shows how weak inflation was in May 2020 when the economy was reeling from the first tight shutdown.
The figure is now above the Bank of England's 2% target for inflation, the highest for almost two years, and exceeding expectations for inflation to rise to 1.8%.
British government bond yields rose early on Wednesday, with the yield on two-year gilts - considered sensitive to expectations about BoE policy moves - briefly touched their highest in nearly a month.
CPI data showed that fuel prices in May were touching 18% higher than the previous year while costs of clothes and shoes rose 2.1% as people, emerging from their closed isolation, bought new clothes.
Pricing data was collected on or around May 11, before bars and restaurants were allowed to serve customers indoors and cinemas and hotels reopened from May 17.
The Bank of England stated that it is expecting inflation to reach 2.5% by the end of this year before stabilising back to its 2% target as the impact of higher energy prices after the shutdown fades along with other cost pressures, such as bottlenecks in supply chains.
In addition, core inflation, which excludes food, energy, and other volatile prices, rose to 2.0% in the 12 months through May.