UK inflation holds at 2.8% as food price rises ease

UK inflation failed to budge in May, holding at 2.8% as cheaper food took some of the edge off rising petrol costs. The reading, released by the Office for National Statistics on 17 June, matched April’s 13-month low and came in below the 3% economists had expected, just one day before the Bank of England was due to announce its next rate decision.

The numbers point to a mixed picture for households. Slower price rises for meat, dairy and vegetables helped offset higher fuel costs, but that relief was only partial for families already stretched by years of elevated living expenses. Food inflation may have eased, yet it remains high enough to keep supermarket bills uncomfortable, especially when petrol still leaks into the wider cost of transport and commuting.

Underlying inflation was also not fully subdued. Core CPI, which strips out food, energy, alcohol and tobacco, rose 2.6% in the 12 months to May. Services inflation, a closely watched gauge of domestic price pressure, climbed from 3.2% to 3.7%, suggesting parts of the economy are still passing on higher costs even as headline inflation holds steady.

That split matters for policymakers. The Bank of England has been trying to judge whether inflation is cooling quickly enough to justify easier borrowing conditions, and the May figures offered little simple reassurance. The pound weakened slightly after the data, reflecting how closely traders are watching the path of rates, wages and consumer spending heading into the next decision.

Food-price monitors said inflation across grocery staples fell from 3.7% in the 12 months to April to 3.0% in the 12 months to May. Even so, food prices were still 30.7% higher than in April 2022, a reminder that a slower pace of increase does not mean prices have fallen back. For households, that is the central tension in the inflation story: headline stability can coexist with a sense that everyday spending still feels expensive.