An unexpected easing in grocery-price growth kept the headline rate unchanged in May, offering limited relief to households ahead of the Bank of England’s next interest-rate decision.
UK inflation remained unexpectedly steady in May as slower increases in food prices helped counter rising transport costs, providing a modest reprieve for households still facing persistent pressure on their finances.
The Consumer Prices Index rose by 2.8% in the 12 months to May, unchanged from April and below forecasts that had suggested inflation would accelerate. The figure also remained at its lowest level in more than a year, although it continued to exceed the Bank of England’s 2% target.
The most significant downward influence came from food and non-alcoholic beverages. Prices in the category increased by 2.2% over the year, down sharply from 3% in April and the slowest annual rate recorded since December 2024.
On a monthly basis, food prices fell slightly in May, with lower or more slowly rising costs for products including meat, dairy goods and vegetables helping to reduce pressure on household shopping bills.
The improvement will be welcomed by consumers following several years of steep increases in the cost of essential goods. However, food prices remain substantially higher than before the inflation surge, meaning many families may not immediately feel better off. A lower inflation rate indicates that prices are rising more slowly, rather than returning to their previous levels.
The decline in food inflation was offset by stronger price growth elsewhere in the economy. Transport costs increased as airfares, petrol prices and vehicle-related charges rose. These pressures prevented the overall inflation rate from falling.
Underlying inflation also remained a concern. Core inflation, which excludes volatile food and energy prices, edged higher, while services inflation rose to 3.7%. Services prices are closely monitored by the Bank of England because they are often linked to wages and domestic economic conditions.
The figures arrive at a sensitive moment for monetary policymakers. The Bank has been attempting to bring inflation sustainably back to its target without placing unnecessary pressure on economic growth, employment and mortgage holders.
The unexpectedly stable headline rate may reduce the immediate case for an interest-rate increase. Nevertheless, continued strength in services inflation and uncertainty surrounding global energy markets are likely to encourage policymakers to remain cautious.
International developments remain an important risk. Disruption to oil supplies or further geopolitical instability could push fuel, transport and manufacturing costs higher, eventually feeding through to consumer prices. Businesses have also warned that increases in raw-material, energy and supply-chain costs could place renewed pressure on food prices later in the year.
For the government, the figures offer some reassurance that inflation has not accelerated as rapidly as feared. Yet the economic picture remains challenging. Inflation is still above target, borrowing costs remain elevated and household budgets continue to reflect the cumulative impact of earlier price increases.
May’s data therefore represents a period of relative stability rather than a decisive end to Britain’s cost-of-living pressures. Slower food inflation may provide some relief at supermarket checkouts, but rising transport costs and persistent services inflation show that the battle to restore price stability is far from over.
