Inflation in the UK unexpectedly held at 2.8% in the year to May, defying forecasts of a rise to 3%, as the pace of food price rises slowed to its lowest in 17 months, according to new figures from the Office for National Statistics (ONS).
Transport costs surged at the fastest rate – motor fuels were 24.6% higher than a year earlier – pushing overall transport inflation to 6.8%, the highest since December 2022. But Grant Fitzner, the ONS’s chief economist, said that was “offset by lower food prices, with decreases in inflation seen across a range of meat, dairy and vegetable items compared to last month.”
“UK inflation held at 2.8% in May, defying forecast rise to 3%, as food price rises slowed to 17-month low.”
Food inflation fell from 3% in April to 2.2% in May, the slowest rate since December 2024. The price of beef and veal rose 9.4% year on year, down from 13.2% the previous month and 18.8% in March. The British Retail Consortium said easing food inflation showed British supermarkets were highly competitive, but warned it was likely to rise in the coming months.
The Food and Drink Federation cautioned that prices “still don’t reflect the inflation caused by the closure of the Strait of Hormuz.” Its chief executive, Karen Betts, explained: “It generally takes several months for the increased costs paid by farmers, processors and manufacturers to filter into raised prices at the tills,” partly because of long-term contracts for energy and ingredients.
Domestic heating oil, which has no price cap, fell after rising sharply due to the war, offering some relief. But Charlotte O’Leary, associate economist at the National Institute of Economic and Social Research, said there is expected to be 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, and cautioned that “should the [US-Iran] deal collapse, oil may rebound and reinstate upward pressure on inflation.”
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.” The figures, which surprised analysts who had expected steady increases due to the Middle East conflict, suggest the peace deal between the US and Iran may keep future rises smaller than feared.