Inflation eased back last month - as widely predicted - to 2.5 per cent year-on-year, the lowest rate since October, from 2.8 per cent in April and a recent peak of 3.1 per cent in March.
Stable food prices, replacing increases in May last year, made an important contribution to the downward trend along with a continuing drop in gas and electricity bills, again replacing big rises in the 12-monthly calculation.
Overall prices as measured by Chancellor Gordon Brown's chosen consumer prices index rose by 0.29 per cent between April and May, but the annual score remained well above the two per cent target he set the Bank of England as it has been since April last year.
On view of this few City economists were inclined to back away from predictions that the Bank will raise interest rates by another quarter point to 5.75 per cent and possibly to six per cent by the end of the year.
Mervyn King, the Bank's governor, warned on Monday night that the Bank will respond if necessary to signs of persistent underlying inflation, such as the determination of companies to drive up their prices and easy lending policies by banks and building societies.
Earlier this month, the Chartered Institute for Purchasing & Supply reported that factory gate inflation picked up in May to equal a record high. A CBI survey showed manufacturers intending to raise prices at the fastest rate in 12 years.
The long-running Retail Prices Index, the basis for state pensions and other benefits and used as a benchmark by many pay negotiators, eased back to 4.3 per cent year on year from 4.5 per cent in April and 4.8 per cent in May.
This was partly because the RPI includes mortgage interest and other costs of home ownership not counted in the CPI and so reflects the Bank's own rate increases since last August. But leaving out mortgage interest the RPI is still 3.3 per cent up over the latest 12 months after rising 0.35 per cent in May.
National Statistics said the biggest downward impact on consumer price inflation last month came from utility bills, slicing 0.23 percentage points off the headline rate.
The other big factor came from falling prices for vegetables and meat, which rose sharply in May last year.
"The Bank should still remain worried about longer term upside inflation risks," said David Brown, an economist at Bear Stearns.
Howard Archer, an economist at Global Insight, pointed out that, while the headline indices had fallen, "core" inflation actually edged higher last month - to 1.9 per cent from 1.8 per cent.
He warned: "We believe the Bank's monetary policy committee could lift interest rates by a further quarter point as soon a July and there remains a very real possibility that rates will reach six per cent by the end of the year."
