Britain's annual inflation rate held steady in May, defying market expectations, as falling food prices offset surging transport expenses.
Growth in consumer prices came in at 2.8% year over year in May, unchanged from April, according to data from the Office for National Statistics released Wednesday. The latest figure was below the consensus estimate of 3%.
"The main upward movement came from transport with airfares, vehicle taxes and petrol prices all pushing up inflation," ONS Chief Economist Grant Fitzner said. "These were offset by lower food prices, with decreases in inflation seen across a range of meat, dairy and vegetable items compared to last month, as well as the cost of domestic heating oil, which fell back after climbing in recent months."
Transport prices rose by 6.8% annually in May 2026, up from 4.5% a month ago and marking the sharpest growth since December 2022. Meanwhile, the annual rise in food and non-alcoholic beverage prices stood at 2.2%, down from the previous month's 3% and marking the softest growth since December 2024.
Excluding energy, food, alcohol and tobacco, the annual inflation rate ticked up to 2.6% from the prior month's 2.5%, below the market forecast of 2.7%.
The Confederation of British Industry regarded the latest inflation print as a "welcome surprise," saying markets widely anticipated a rise in inflation for the month.
"But this is likely to be the calm before the storm, with price pressures set to see a pronounced rise over the coming months. The direct contribution from higher energy costs is set to increase - particularly with households' energy bills rising from June - and this is likely to feed through to other parts of the inflation basket," said Alpesh Paleja, deputy chief economist at the CBI.
Paleja added that this expectation "remains true" despite the US-Iran ceasefire extension and deal to reopen the Strait of Hormuz, though the agreement reduces the risk of more severe inflation scenarios.
