UK inflation holds steady at 2.8% as lower food prices offset transport costs

UK inflation remained unchanged at 2.8% in May, providing some welcome stability for businesses and consumers despite ongoing concerns about rising transport costs and geopolitical tensions.

Figures released by the Office for National Statistics (ONS) showed that the Consumer Prices Index (CPI) rose by 2.8% in the 12 months to May 2026, matching the rate recorded in April and coming in below economists’ expectations of a rise to 3.0%.

The broader Consumer Prices Index including owner occupiers’ housing costs (CPIH) also remained unchanged at 3.0% over the same period.

On a monthly basis, both CPI and CPIH increased by 0.2% in May, the same rate recorded in May 2025.

According to the ONS, transport made the largest upward contribution to inflation during the month, with increases in air fares, vehicle taxes and petrol prices pushing costs higher. However, these pressures were largely offset by slower food price inflation, with lower prices across a range of meat, dairy and vegetable products helping to keep the headline rate stable.

Grant Fitzner, Chief Economist at the ONS, said: “After last month’s slowdown, inflation held steady in May as various price movements offset each other.

“The main upward movement came from transport with airfares, vehicle taxes and petrol prices all pushing up inflation.

“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.”

The latest figures suggest that fears of an immediate inflationary impact from escalating tensions in the Middle East, particularly concerns around energy markets following the conflict involving Iran, have yet to feed through into official consumer price data.

While inflation remains above the Bank of England’s 2% target, food price inflation slowed to its lowest level in 17 months, helping to ease pressure on households and businesses.

Core inflation measures presented a mixed picture. Core CPI, which excludes energy, food, alcohol and tobacco, edged up to 2.6% from 2.5% in April. Meanwhile, core CPIH remained unchanged at 2.8%.

Services inflation continued to rise, with the annual CPI services rate increasing from 3.2% to 3.7%, while goods inflation slowed from 2.4% to 2.0%.

Industry leaders said the figures offered some reassurance for SMEs facing ongoing cost pressures.

“For firms at the coalface, the fact that inflation has not accelerated further helps relieve some of the uncertainty around already stretched margins, making it easier to keep projects moving and plan for growth with greater confidence.

“Many businesses have likely spent recent years absorbing rising costs rather than passing them on to customers, often forcing them to dip into reserves or scale back investment plans. While these figures are encouraging, businesses still need a stable environment that gives them the confidence to invest.

“The UK is full of ambitious entrepreneurs with the potential to drive investment and growth. Unless the government acts to provide greater certainty, we risk dampening those ambitions and prolonging the cycle of caution that has held many businesses back in recent years.”

“Today’s figures will be welcome news for businesses, with inflation remaining stable despite ongoing pressures across the economy,” he said.

“Many SMEs are still feeling the impact of higher costs, so any sign of things stabilising is good news. Businesses will also be keeping a close eye on developments on the world stage – and there’s real hope that some of the recent progress we’ve seen could help stabilise energy prices and supply chains, and take some of the pressure off interest rates.

“Attention will now turn to the Bank of England’s decision tomorrow. While businesses will be hoping this strengthens the case for lower interest rates over time, they’ll ultimately be looking for greater certainty to support investment and growth.”

With inflation proving more resilient than many had expected, attention will now focus on the Bank of England’s next move as policymakers balance signs of easing price pressures against persistently elevated services inflation and continuing global uncertainty.