The CPI fell by 0.1 per cent, down from April’s 2.3 per cent, but it is still above the Bank of England’s target of 2 per cent.
Annual inflation measured by the Retail Prices Index, which includes housing costs such as mortgages, was at -1.1 per cent in May, compared with -1.2 per cent in April.
The ONS says the main factors affecting the CPI also affected the RPI, namely downward pressures from food costs and energy bills. But the RPI also experienced an upward pressure from housing where the largest effect came from mortgage interest payments.
RPIX inflation – the all-items RPI excluding mortgage interest payments – was at 1.6 per cent in May, down from 1.7 per cent in April.
British Chambers of Commerce chief economist David Kern says: “Although the drop in inflation was less than anticipated, these figures indicate that CPI inflation is set to fall further in the coming months, while RPI is likely to move deeper into deflationary territory.
“Whatever the longer-term inflation risks may be, they are unlikely to materialise in the near future and can only be dealt with after the recession ends.
“The main priority must remain on easing the severe downturn in economic activity and to contain the relentless increases in unemployment. Economic policy must stay expansionary and it would be dangerous to withdraw the monetary and fiscal stimulus too early.”