Inflation remained stubbornly at 2.8% in the year to May, defying economists’ expectations of a rise to 3% — a surprise pause driven by the sharpest slowdown in food prices for 17 months, according to figures from the Office for National Statistics (ONS).
The cost of meat, dairy and vegetables rose at a slower pace than in recent months, pulling food inflation down from 3% in April to 2.2% in May, the lowest rate since December 2024. Beef and veal, for example, went up by 9.4% in the year to May, compared with 13.2% in April and 18.8% in March. But the relief was offset by the fastest annual rise in transport costs since December 2022, driven by a 24.6% jump in motor fuels, higher airfares and vehicle taxes.
“Inflation unexpectedly held at 2.8% in May as slowing food prices offset rising transport costs.”
Grant Fitzner, the ONS’s chief economist, said that while transport pushed inflation up, it was “offset by lower food prices, with decreases in inflation seen across a range of meat, dairy and vegetable items compared to last month”. The peace deal agreed between the US and Iran means further increases could be smaller, analysts said, but Charlotte O’Leary, associate economist at the National Institute of Economic and Social Research, warned of a “sizeable” upward impact on inflation when Ofgem sets its energy price cap in July. “The lagged effects of higher oil prices are still feeding through,” she said, adding that “should the [US-Iran] deal collapse, oil may rebound and reinstate upward pressure on inflation”.
The British Retail Consortium said the easing food inflation showed the supermarket sector was “highly competitive”, but predicted food prices would rise again in coming months. Karen Betts, chief executive of the Food and Drink Federation, explained that “prices still don’t reflect the inflation caused by the closure of the Strait of Hormuz” because “it generally takes several months for the increased costs paid by farmers, processors and manufacturers to filter into raised prices at the tills”, partly due to long-term contracts for energy and ingredients.
Chancellor Rachel Reeves said the government was “protecting families and businesses from rising costs, with cuts in energy bills and freezes in fuel duty and rail fares”. For now, inflation has held its ground — but economists warn the calm may be short-lived.