This is bad news for the Bank of England and for Britain, as it means interest rates will have to rise further. Here is the chart:
CPIH in the chart is inflation including owner occupiers' housing costs. This rose to 7.9% in the 12 months to May 2023, up from 7.8% in April. OOH in the chart is the owner occupiers' housing costs component separated out. OOH accounts for 16% of the CPIH and is the main driver for differences between the CPIH and CPI inflation rates.
The Consumer Prices Index (CPI) rose by 8.7% in the 12 months to May 2023, unchanged from April.
According to the Office of National Statistics, the main culprit was
Rising prices for air travel, recreational and cultural goods and
services, and second-hand cars resulted in the largest upward
contributions to the monthly change in both the CPIH and CPI annual
rates.
Consumer spending is still strong in the UK, which means there is plenty of money sloshing around (hence the UK economy is still growing, unlike the eurozone). But strong demand means there is no incentive for retailers to cut prices. Interest rates will certainly go up this week.