UK inflation stays at 2.8% as slowing food prices offset rising transport costs

UK inflation held at 2.8% in May, as a sharp rise in transport costs was offset by slowing food prices, according to official data released Wednesday. The Office for National Statistics reported that the consumer prices index remained unchanged from April, defying economist forecasts of an increase to 3% [1]. Transport costs rose 6.8% in May, up from 4.5% in April and the highest rate since December 2022, driven by air fares, vehicle taxes and petrol prices [1]. Air fares jumped 10.3% between April and May, compared with a 5% fall over the same period in 2025, a movement the ONS said may have been influenced by the timing of Easter and school holidays [1]. Grant Fitner, chief economist at the ONS, said: "Inflation held steady in May as various price movements offset each other" [1]. The upward pressure from transport was countered by easing food inflation, which slowed to 2.2%, the lowest since December 2024, with decreases recorded across meat, dairy and vegetable items [1]. Core inflation, which strips out volatile energy and food components, edged up to 2.6% from 2.5% in April [1]. The reading remains above the Bank of England's 2% target, and markets expect policymakers to hold interest rates at 3.75% on Thursday as they assess the economic impact of the conflict in the Middle East [1]. The closure of the Strait of Hormuz has driven up global oil prices over the past three months [1]. The 2026 Iran war and the maritime blockade have been characterized by the International Energy Agency as the "largest supply disruption in the history of the global oil market" [2]. Brent Crude surged past $120 per barrel following the strait's closure on 4 March 2026, and the oil production of Kuwait, Iraq, Saudi Arabia and the United Arab Emirates collectively dropped by a reported 6.7 million barrels per day by 10 March [2]. The crisis has drawn comparisons to the 1970s energy crisis, when petroleum shortages and elevated prices led to stagnant economic growth and the coining of the term stagflation [7]. Chancellor Rachel Reeves said: "While the war in the Middle East pushes prices up globally, we have got the right economic plan and inflation has held steady" [1]. The yield on the 10-year UK government bond dropped almost four basis points to 4.75% following the inflation reading, the lowest in a month [1]. Suren Thiru, chief economist at the Institute of Chartered Accountants in England and Wales, said the US-Iran peace deal reached earlier this week could help contain further price rises. "Although the US-Iran peace deal has arrived too late to stop higher energy bills and food costs triggering a summer inflation spike, if oil prices continue sinking then a peak well below 4% is becoming increasingly plausible," he said [1]. Analysts nevertheless warn that food inflation could move higher in the coming months, as increased costs faced by farmers and manufacturers often take several months to filter through to supermarket shelves [1].