UK Inflation Holds Steady at 2.8% as Food Price Rises Slow

The latest figures from the Office for National Statistics show that consumer price inflation in the United Kingdom remained unchanged at 2.8% in the year to May 2026. This steady rate comes as easing pressures in food and non-alcoholic beverages helped offset rising costs in transport, particularly air fares and motor fuels.

Understanding the Latest CPI Data

The Consumer Prices Index (CPI), the main measure of inflation used by the government and the Bank of England, recorded no change from the previous month. Economists had anticipated a modest uptick, but the outturn surprised on the downside. Food inflation fell to its lowest level since December 2024, providing a significant counterbalance to other upward pressures.

Transport costs rose sharply, with the annual rate reaching 6.8%, the highest since late 2022. This was driven by higher air fares, motor fuel prices, and adjustments to vehicle excise duty.

Breakdown of Key Components

Food and non-alcoholic beverages saw their inflation rate drop to 2.2% year-on-year. Items such as meat, dairy, and vegetables contributed to the slowdown. Housing and household services inflation eased to 2.7%, while recreation and culture prices moderated slightly.

Core inflation measures, which exclude volatile energy, food, alcohol and tobacco, remained broadly stable, with core CPIH at 2.8%.

Context and Historical Perspective

Inflation has come a long way from the peak of 11.1% seen in October 2022 amid the energy crisis following Russia's invasion of Ukraine. The current 2.8% rate sits above the Bank of England's 2% target but reflects a more stable environment than the double-digit levels of recent years.

Recent months have seen fluctuations influenced by global events, including tensions in the Middle East affecting energy prices, though food supply chains have shown resilience.

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Impact on Households and Consumers

For UK households, the steady inflation rate offers some relief, particularly in grocery bills. However, higher transport costs may affect those reliant on air travel or driving. The easing of food prices is welcome news for family budgets strained by previous years of high inflation.

Real wages have been recovering gradually, but persistent above-target inflation continues to influence spending decisions and savings rates.

Bank of England Policy Implications

The Bank of England will closely monitor these figures ahead of its next Monetary Policy Committee meeting. While the steady rate provides some breathing room, officials remain vigilant about second-round effects from transport and potential energy price rises later in the summer due to the Ofgem price cap adjustment.

Interest rate expectations may shift slightly following the data, with markets pricing in a cautious approach to any further cuts.

Government and Expert Reactions

Chancellor Rachel Reeves and other officials have welcomed the contained food price inflation, noting the role of supermarket competition. Economists from institutions like the Institute for Fiscal Studies highlight that while the headline figure is stable, underlying pressures in services and transport warrant attention.

Business groups have called for continued focus on supply chain stability to sustain the positive trends in food costs.

Future Outlook and Risks

Looking ahead, analysts expect inflation to edge higher in coming months due to energy price cap increases and ongoing global uncertainties. The Bank of England forecasts suggest a gradual return toward the 2% target over the medium term, assuming no major external shocks.

Key risks include further geopolitical developments affecting oil prices and potential wage pressures in the labour market.

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Comparative International View

The UK's 2.8% rate compares favourably with some European peers, though it remains above the eurozone average in recent readings. Global inflation trends show a broad disinflationary path, supported by central bank actions worldwide.

Practical Advice for Individuals and Businesses

Households can benefit from shopping around for groceries and considering fixed-rate energy deals where possible. Businesses should review pricing strategies and supply contracts to navigate the mixed picture of falling food costs and rising transport expenses.

Longer-term, focusing on energy efficiency and diversified sourcing can help mitigate future volatility.