UK inflation held steady in May, missed expectations for a small increase

Data released by the Office for National Statistics showed on Tuesday that UK's inflation rate was unchanged in May at 0.3 percent, the core inflation also staying steady at 1.2 percent. UK consumer prices failed to pick up and held steady in the fifth month of the year, coming in lower than market forecasts.

Overall, the figures underlined the lack of inflationary pressure in Britain's economy, with inflation holding at 0.3 percent throughout 2016 with the exception of March. Inflation has been below the BoE's two percent target for more than two years.

Chris Williamson, chief economist at Markit, said the signs were the UK economy would continue to be weak in the near future. Subdued wage growth should help keep the headline rate down below the Bank's target, he added.

That said, BoE policymakers are unlikely to put too weight on the inflation data when they meet this week, given the uncertainty created by next week's referendum on Britain's European Union membership.

"Today’s outturn does little to change our view of an ongoing climb in annual inflation towards 1 percent around the turn of the year. The recovery in oil prices is likely to continue to provide impetus alongside the rise in import costs caused by sterling’s recent weakness," said Lloyds bank in a report.