British inflation rate falls to 1.5% in May

Britain's consumer prices index (CPI) grew by 1.5 percent in the year to May 2014, down from of 1.8 percent in April, said the Office for National Statistics (ONS) Tuesday.
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 and non-alcoholic drinks, and clothing sectors, said the ONS.
The largest offsetting upward effects came from motor fuels and recreation and culture, said the institute.
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, said the ONS.
CPIH, an inflation gauge include consumer prices and owner occupier's housing costs, increased 1.4 percent in the 12-month to May 2014, down from 1.6 percent a month previous, data also showed.
"May's drop in Britain consumer price inflation demonstrates that strong growth in economic activity is not prompting underlying price pressures to build," said Samuel Tombs, an economist at Capital Economics, in an analysis piece.
"The fall in CPI inflation to 1.5 percent was larger than the consensus estimate (1.7 percent) and left inflation at its lowest level since late-2009," said Tombs.
The London-based economic research company remains its forecast that inflation rate would ease to as low as one percent by the end of this year.
"We still believe there is considerable scope for productivity growth to pick up, keeping inflation low over the medium term," said Tombs.
"Against this low inflation backdrop, we believe the Bank of England is likely to tread cautiously and raise interest rates only very gradually over the coming years," said Tombs.