The United Kingdom’ s annual inflation stood unchanged at 2.8% in May, according to data released by the Office for National Statistics (ONS). This figure was modestly under economists’ predictions, who had anticipated a rise to 3% amid concerns over higher energy costs tied to the Middle East conflict.
U.K. inflation for May came in below both the euro zone’s rate of 3.2% and the U.S. rate of 4.2% reported for the same period. The April decline in British inflation had been attributed to a temporary reduction in the regulated energy price cap, which is due to increase by 13% later in the summer, likely resulting in higher household energy costs.
Price trends in May reflected a balance between rising transportation expenses and declining food and energy costs. The ONS reported that travel-related expenses—including airfares, vehicle taxes, and petrol—contributed upward pressure to overall inflation. Airfares surged by 10.3% over the previous month, and average gasoline prices increased by 0.6 pence per liter, reaching their highest point since November 2022. The escalation in transportation costs partly coincided with this year’s timing of the Easter holiday.
Meanwhile, the upward movement in inflation from transportation was counteracted by falling prices for a range of food items, notably meat, dairy, and vegetables. The cost of domestic heating oil also declined after previous increases. In manufacturing, the cost of raw materials continued to grow, led by higher chemical prices. However, output price growth slowed as the price of domestically manufactured cars fell.
External factors, such as the closure of the Strait of Hormuz, have contributed to rising global oil prices over the past three months, with subsequent effects on fuel and other related products.
At its latest session, the Bank of England’s Monetary Policy Committee opted to maintain its benchmark interest rate at 3.75%. The inflation rate remains above the government’s 2% target as policymakers weigh the influence of external shocks, while expectations are that rates will remain steady in the near term.
The BOE is set to announce its next interest rate decision on Thursday, with most forecasts suggesting no immediate change as officials monitor economic conditions.
