UK CPI inflation falls to 1.5%

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UK Consumer Prices Index (CPI) inflation fell in the year to May, after the previous month saw its first climb in 10 months.

The Office for National Statistics (ONS) reported CPI grew by 1.5% in the year to May 2014, down from 1.8% in April.

Falls in transport services costs, notably air fares, provided the largest contribution to the decrease in the rate. Other large downward effects came from the food & non-alcoholic drinks and clothing sectors.

The largest offsetting upward effects came from motor fuels, and recreation and culture.

The timing of Easter in April is likely to have had an impact on movements in the index, most notably for air and sea fares.

CPIH, which includes the costs faced by owner occupiers, grew by 1.4% in the year to May 2014, down from 1.6% in April. RPIJ, a version of the Retail Prices Index which meets international standards, grew by 1.7%, down from 1.8% in April.

Last month the ONS reported CPI grew in the year to April 2014, the first rise since last summer, although some commentators described this as a 'blip'.

Meanwhile the ONS revealed average UK house prices rose by 9.9% in year to April, the largest annual rise since 2010. This was driven by London prices, which rose by 18.7% on average.

Bank of England Governor Mark Carney warned last month a housing bubble is the greatest threat to the UK economic recovery, prompting the Prime Minister to say he may rethink the Help to Buy scheme which has been accused of inflating the house price bubble.

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