UK inflation holds at 2.8% as transport costs offset easing food prices

UK inflation remained unchanged at 2.8% in the 12 months to May, according to the latest figures from the Office for National Statistics (ONS), with higher transport costs offset by easing food price inflation.

The Consumer Prices Index (CPI), which is used as the Government’s target measure of inflation, held steady at 2.8% for a second consecutive month. The broader Consumer Prices Index including owner occupiers’ housing costs (CPIH) also remained unchanged at 3.0%. On a monthly basis, both CPI and CPIH rose by 0.2%, matching the increase recorded in May last year.

Transport made the largest upward contribution to inflation during the month, driven by higher air fares, motor fuel prices and sea fares. Food and non-alcoholic beverages provided the largest downward contribution, with annual food inflation slowing from 3.0% to 2.2%, its lowest level since December 2024.

The ONS said transport inflation accelerated to 6.8%, the highest level since December 2022, while average petrol prices reached 157.4p per litre, their highest level since November 2022. At the same time, owner occupiers’ housing costs continued to ease, helping to offset wider price pressures across the economy.

The latest figures are likely to reinforce expectations that the Bank of England will leave Bank Rate unchanged when the Monetary Policy Committee announces its latest decision later this week, although transport-related inflationary pressures remain elevated.

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Neil Rudge, chief banking officer at Shawbrook: 

“Today’s figures will be welcome news for businesses, with inflation remaining stable despite ongoing pressures across the economy. Many SMEs are still feeling the impact of higher costs, so any sign of things stabilising is good news. Businesses will also be keeping a close eye on developments on the world stage – and there’s real hope that some of the recent progress we’ve seen could help stabilise energy prices and supply chains, and take some of the pressure off interest rates.

“Attention will now turn to the Bank of England’s decision tomorrow. While businesses will be hoping this strengthens the case for lower interest rates over time, they’ll ultimately be looking for greater certainty to support investment and growth.”