Inflation in the UK held steady at 2.8% in the year to May, defying widespread expectations of a rise to 3%, as slower increases in the cost of meat, dairy and vegetables offset surging petrol prices, according to official figures.
The Office for National Statistics (ONS) said transport costs rose at the fastest annual rate since December 2022 — hitting 6.8% — driven by motor fuels, which were 24.6% higher than a year earlier. But that upward pressure was “offset by lower food prices, with decreases in inflation seen across a range of meat, dairy and vegetable items compared to last month”, said Grant Fitzner, the ONS’s chief economist.
“UK inflation unexpectedly held at 2.8% in May as slowing food price rises offset higher transport costs.”
Food inflation fell from 3% in April to 2.2% in May, the slowest rate since December 2024. The price of meat remains high, but the pace of increase is easing dramatically: beef and veal rose by 9.4% in the year to May, down from 13.2% in April and 18.8% in March.
The unexpected stability comes after economists had predicted inflation would start climbing again due to the ongoing impact of the war in the Middle East. However, a peace deal agreed between the US and Iran has led analysts to suggest further increases could be smaller than feared.
Domestic heating oil, which unlike energy bills is not subject to a price cap, also fell after rising sharply during the conflict. Yet the relief may be short-lived. 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. But she cautioned that “should the [US-Iran] deal collapse, oil may rebound and reinstate upward pressure on inflation”.
The British Retail Consortium (BRC) said easing food inflation showed the British supermarket sector was highly competitive, but warned that food inflation was likely to rise in the coming months. Similarly, the Food and Drink Federation’s chief executive, Karen Betts, said “prices still don’t reflect the inflation caused by the closure of the Strait of Hormuz”. She explained that 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 “the widespread use of 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”. Whether those measures will be enough to shield households from the delayed impact of global shocks remains an open question.