Inflation unexpectedly holds steady at 2.8%
By Abigail Townsend
Date: Wednesday 17 Jun 2026
(Sharecast News) - UK inflation unexpectedly held steady in May, official data showed on Wednesday, as lower food prices helped offset sharply higher transport costs.
In data released ahead of the Bank of England's latest decision on interest rates, the Office for National Statistics confirmed that the consumer prices index rose by 2.8% in the 12 months to May, unchanged on April. Consensus had been for a rise, to 3.0%.
Transport made the largest upward contribution, with airfares, vehicle taxes and petrol prices all pushing up inflation. Airfares spiked 10.3%, which the ONS said was in part likely influenced the timing of Easter and the associated school holidays. Motor fuels surged 24.6%, up from April's 23% and the highest rate since September 2022.
However, partially offsetting that was food prices. They rose 2.2%, down on April's 3.0% rise and the lowest rate since December 2024.
On a monthly basis, CPI rose by 0.2% in May, below forecasts for a 0.4% uplift.
Core inflation, which strips out the more volatile elements of energy, food, alcohol and tobacco, rose 2.6%. The market had expected growth of 2.7%.
The BoE's Monetary Policy Committee is due to publish its latest decision on interest rates on Thursday, and is widely forecast to leave Bank Rate at 3.75%.
The cost of borrowing had been expected to rise later this year, however, after the outbreak of war in the Middle East sent global energy prices soaring and reignited inflationary fears.
But the latest CPI data suggests that the cost of living impact may not be as bad as initially feared. A recent peace deal between the US and Iran, which is due to be signed on Friday, has also fuelled hopes that the Strait of Hormuz will reopen, sending crude oil prices sharply lower.
Alpesh Paleja, deputy chief economist at the Confederation of British Industry, said: "The latest data comes as a welcome surprise. But this is likely to be the calm before the storm, with price pressures set to see a pronounced rise over the coming months.
"That remains true despite the deal between the US and Iran. However, the deal does reduce the risk of the more severe inflation scenarios that had been feared if the conflict escalated further or energy infrastructure suffered additional damage."
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