inflation fell to 3.4% in May from 3.5% in April as rising food prices offset a drop in air fares and transport costs, official figures show. The single percentage point drop in the rate of the Consumer Prices Index (CPI) will likely come as a disappointment to Chancellor Rachel Reeves and the Labour Government, which has pledged to put more money into people’s pockets.

May’s inflation rate of 3.4% is well above the Bank of England’s 2% target, though the Government and Threadneedle Street expect this to fall further over the summer months. Ms Reeves said in a statement: “Our number one mission is to put more money in the pockets of working people through our Plan for Change.

“We took the necessary choices to stabilise the public finances and get inflation under control after the double digit increases we saw under the previous government, but we know there’s more to do. Last week we extended the £3 bus fare cap, funded free school meals for over half a million more children, and are delivering our plans for free breakfast clubs for every child in the country.

“This Government is investing in Britain’s renewal to make working people better off.”

Most economists were expecting the CPI rate to come in at 3.3% for May as price rises cooled after a raft of bill hikes the previous month, that pushed inflation to the highest level in more than a year.

The latest inflation reading from the Office for National Statistics (ONS) comes a day before the Bank of England’s Monetary Policy Committee announces whether it will cut, hold or raise interest rates. Rate-setters are expected to keep base rate at 4.25% on Thursday (June 19).

Monica George Michail, Associate Economist at the National Institute of Economic and Social Research, said: “We forecast inflation to remain above 3% for the remainder of the year amidst persistent wage growth and the inflationary effects from higher government spending.

“Additionally, the current tensions in the Middle East are causing greater economic uncertainty. We therefore expect the Bank of England to keep rates on hold this Thursday and implement just one further cut this year.”

ONS acting chief economist Richard Heys said: “A variety of counteracting price movements meant inflation was little changed in May.

“Air fares fell this month, compared with a large rise at the same time last year, as the timing of Easter and school holidays affected pricing. Meanwhile, motor fuel costs also saw a drop.

“These were partially offset by rising food prices, particularly items such as chocolates and meat products. The cost of furniture and household goods, including fridge freezers and vacuum cleaners, also increased.”