The latest UK headline inflation reading surprised us on the downside, coming out at 2.0% in May down from 2.3% in April and reaching the Bank of England target level for the first time in three years. Non-energy industrial goods (particularly household goods, clothing and footwear, and vehicles), food, alcohol and tobacco were the categories that contributed the most to the slowdown in the May inflation outturn. On the other hand, transport (particularly motor fuels) was a positive contributor.