Inflation in the UK fell to 3.4% last month as shop prices declined, complicating the Bank of England’s interest rates decision on Thursday.

Policymakers are still almost certain to hold interest rates at 4.25% at their meeting despite May’s decline in the consumer prices index (CPI), but it could raise hopes for cuts for the summer and autumn.

City economists had correctly predicted the fall in CPI to 3.4%, down from 3.5% in April. The central bank’s target is 2%.

Recent data showing the economy has slowed has increased pressure on the Bank to cut the cost of borrowing. Wages growth fell and unemployment increased in the February to April quarter, while the economy shrank in April.

Earlier this month the Office for National Statistics said it had overestimated April’s rise in CPI to 3.5% after the effect of higher car tax bills was exaggerated. It said the miscalculation meant CPI and the increase in the retail prices index to 6.4% were overstated by 0.1 percentage points.

The ONS left the original readings in place but said it would use the correctly weighted data in future calculations.

More details soon …