Petrol and food set to push up UK inflation
Rising petrol and food prices are expected to lead to a slight rise in the underlying rate of inflation today.
Analysts forecast the underlying rate of inflation - which excludes mortgage rate repayments - would come in at 2.1% for May, up from 2.0% in April.
London was taken by surprise by April's figure, caused by rising food and gas prices.
Food prices surged by the biggest amount for five years due to the impact of the foot-and-mouth crisis and flooding earlier in the year.
The Bank of England uses the underlying rate when setting interest rates and a higher-than-expected increase could put off a further cut in July.
The Bank would be concerned that a reduction in the cost of borrowing, to 5%, could push inflation above its 2.5% target.
David Page, economist at stockbroker Investec, said: "The Bank would be most concerned about increases in gas prices and leisure goods, retail products, as these would suggest more of a background inflationary pressure.
"This may stop the Bank's Monetary Policy Committee cutting interest rates at their next meeting."
The London market is split over its forecasts for the headline rate of inflation which includes mortgage rate repayments.
Some predict it will stay the same - at 1.8% - while others forecast a slight fall to 1.7% due to last month's interest rate cut.
