Trade deficit with the rest of the world held broadly steady in May as both imports and exports picked up slightly, official data showed.

The Office for National Statistics said the goods trade gap eased to £7.494 billion from £7.527 billion in April. Economists had forecast a deficit of £7.4 billion.

The goods trade gap with non-EU countries narrowed marginally to £4.027 billion from £4.143 billion. Analysts had forecast a deficit of £4.1 billion. Markets showed little reaction to the data, which have been suffering from tax fraud distortions making them less reliable.

The ONS said the trend in the trade gap remained flat but analysts expect the weakness of sterling to eventually help narrow the trade gap. "We would expect to see the trade deficit narrowing not only on the export argument but also on the fact that UK imports are likely to slow as the UK consumer continues to draw in its horns," said David Page, an economist at Investec.

Bank of England Mervyn King has said he expects a rebalancing of the economy towards exports as the currency and domestic demand weakens. But there was little sign in the trade data that firms were becoming more competitive.

Excluding oil, export prices - and import prices - are rising at their fastest annual rate in 15 years, perhaps as manufacturers are forced to hike their prices because of soaring costs.