Huge relief for Rachel Reeves as UK inflation stays at 2.8% | UK | News
Inflation in the UK remained unchanged at 2.8% last month, much to the relief of Chancellor Rachel Reeves. The Office for National Statistics (ONS) this morning published the latest data revealing how expensive goods and services became in May.
ONS chief economist Grant Fitzner said the interest rate remained steady thanks to falling food prices. He explained that declines in inflation were “seen across a range of meat, dairy and vegetable items, as well as the cost of domestic heating oil, which has fallen following a climb in recent months”.
Economists had previously predicted that the Consumer Price Index (CPI) inflation rate would rise to 3% from 2.8% in April; This was the lowest point in a year, linked to a decline in household energy prices during the month. Regulator Ofgem lowered the energy price cap by 7%, or £10 a month, for the average household using both electricity and gas from the beginning of April; this figure has been driven down further by the Government’s efforts to reduce bills. This meant that inflation temporarily fell despite a rise in fuel costs due to conflicts in the Middle East.
Analysts at Pantheon Macroeconomics previously said airfares were likely to “recover strongly” last month, potentially contributing to higher inflation.
Experts similarly predicted that airline companies and holiday companies would relax price discounts starting from April, contributing to the increase in costs.
Pantheon also revealed that the ONS had overstated the increase in car duty in April 2025, leading to a correction the following month, suggesting that vehicle excise duty could have contributed 0.1% to inflation for the month.
Economists said this could cause the inflation rate to rise further this May if compared on an annual basis.
Inflation is expected to rise further in the coming months, with most experts predicting that inflation will peak between 3.5% and 4% in the second half of 2026.
The Bank of England’s April forecasts also predicted inflation would average 3.1% in the second quarter of the year, peaking at around 3.6% in a more benign scenario linked to conflict in the Middle East.
Policymakers at the Federal Reserve will vote on Thursday to keep interest rates at their current 3.75% level or to increase or decrease that rate.
