U.K. inflation came in hotter than expected in May, as consumer prices rose by an annual 8.7%, unchanged from the previous month.

Economists polled by Reuters had projected an annual rise in the headline consumer price index (CPI) of 8.4%.

On a monthly basis, headline CPI rose by 0.7%, while core inflation -- which excludes volatile energy, food, alcohol and tobacco prices -- rose by an annual 7.1%, up from 6.8% in April and the highest rate since March 1992, according to the Office for National Statistics.

Inflation dipped below 10% annually in April but continues to exceed consensus forecasts and remains significantly higher than the Bank of England's 2% target.

The central bank will announce its next monetary policy decision on Thursday and is widely expected to implement its 13th consecutive interest rate hike as it faces the perilous balancing act of reining in inflation without creating a mortgage crisis and recession.

Sticky inflation and a persistently tight labor market have led economists in recent weeks to increase their forecast for peak interest rates, and the cycle of monetary policy tightening is now expected to last longer than previously expected.

The Organization for Economic Cooperation and Development projected earlier this month that the U.K. will post annual headline inflation of 6.9% this year, the highest level among all advanced economies.

Source : CNBC