UK Inflation Holds at 2.8% in May as Food Price Rises Slow

UK consumer price inflation stayed at 2.8% in the year to May, according to figures released by the Office for National Statistics. The rate matched April's reading and came in below the 3% level that economists had expected.

Transport costs rose at the fastest annual rate among major categories. Motor fuel prices increased 24.6% over the year, contributing to overall transport inflation of 6.8%, the highest since December 2022. Food price inflation fell to 2.2% in the year to May from 3% the previous month.

The slowdown marked the lowest food inflation rate since December 2024 and reflected smaller price increases for meat, dairy and vegetable items.

Domestic heating oil prices declined after earlier sharp rises linked to Middle East developments. Officials noted that the recent US-Iran peace agreement could limit further upward pressure on energy costs. The Bank of England is scheduled to announce its next interest rate decision on Thursday. Economists generally expect the central bank to maintain its current rate of 3.75%.