UK inflation falls less than expected in May

09:30 16Jun09 UK inflation falls less than expected in May

LONDON, June 16 - British consumer price inflation slowed much less than expected in May to remain above the Bank of England's 2.0 percent target for a 20th consecutive month, official data showed on Tuesday.

The Office for National Statistics said consumer prices rose 0.6 percent on the month in May. That took the annual rate to 2.2 percent from 2.3 percent in April and the lowest since January 2008 -- and below forecasts of 2.0 percent.

Besides the anticipated upward effect from tax rises for alcohol and tobacco in this year's Budget, the chief upward influences were from rising prices of DVDs, televisions, clothing and footwear.

British inflation has remained remarkably sticky despite much lower energy and commodity costs compared to last year and an economic recession, perhaps due to the weakness of sterling.

But policymakers still expect inflation to fall sharply over the coming months and, as such, the figures are unlikely to alter expectations that monetary policy will remain loose for a considerable period of time.

The annual RPI measure of inflation, on which many wage deals are based and which includes housing costs, unexpectedly rose to -1.1 percent in May from -1.2 percent in April. Analysts had predicted a drop to -1.5 percent.

As well as being affected by the same upward pressures as the CPI measure, May's RPI was also boosted by housing costs as average mortgage interest rate payments rose slightly.