British 12-month inflation rose to 2.2 percent in May from 2.0 percent in April, lifted by soaring domestic energy bills and rising motor fuel prices, official data showed.

May’s figure breached the Bank of England’s government-set target of 2.0 percent — and was the highest reading since October 2005 when it stood at 2.3 percent.

On a month-on-month basis, the consumer price index climbed by 0.5 percent in May compared with 0.6 percent in April, according to Britain’s Office for National Statistics (ONS).

Both inflation numbers were in line with analysts’ consensus forecasts.

Upward pressure came from soaring domestic gas and electricity bills, which have soared over the past year owing to increased wholesale energy costs.

The surging cost of crude oil also fed through into rising petrol or gasoline prices, the ONS added.

The Bank of England had predicted last month that soaring oil prices would help push 12-month inflation above the government-set 2.0-percent target in the next two years, before dropping back to around target.

That had fuelled market expectations that it was gearing up for a rate hike at some stage this year.

Last Thursday the central bank froze its key interest rate at 4.50 percent for the tenth month in a row, maintaining a wait-and-see policy over the economy.

The decision was set against a backdrop of tumbling global stock markets and investor concerns that Europe and the United States would face fresh rate hikes after three years of favorable credit conditions.

SOURCE: AFP