UK Inflation Surprisingly Holds at 2.8%

The annual inflation rate in the UK stood at 2.8% in May 2026, unchanged from the previous month and below market expectations of 3.0%. The reading remained at its lowest level since March last year. Inflation slowed in housing and household services (2.7% vs. 3.0% in April), the softest level in almost two years, as owner-occupiers’ housing costs continued to ease, while food and non-alcoholic beverages decelerated further (2.2% vs. 3.0%), hitting their lowest level since December 2024. Price growth also moderated in clothing and footwear (0.2% vs. 0.7%) and recreation and culture (1.5% vs. 1.7%). This was offset by upward pressure from transport inflation, which accelerated sharply to 6.8%, the highest since December 2022, up from 4.5% in April, driven by higher motor fuel prices, rising air fares, and an upward effect from vehicle excise duty (VED). On a monthly basis, the CPI rose by 0.2% in May, below forecasts of a 0.4% gain and easing from a 0.7% increase in April.

The annual inflation rate in the UK slowed to 2.8% in April 2026 from 3.3% in March, coming in below market expectations of 3.0% and marking the lowest reading since March last year. The moderation was mainly driven by a sharp slowdown in housing and household services inflation (1.4% vs 5.3% in March), following the introduction of an energy price cap by the UK’s energy regulator on April 1. Transport costs also rose at a softer pace (4.5% vs 4.7%), as a downward effect from vehicle excise duty (VED) partly offset surging motor fuel prices, which climbed 23%, the highest annual increase since September 2022. Inflation also eased for food and non-alcoholic beverages (3.0% vs 3.7%), health (2.4% vs 3.1%), and recreation and culture (1.7% vs 2.8%). Meanwhile, prices rebounded for clothing (0.7% vs -0.8%) and furniture and household goods (0.5% vs -0.4%). On a monthly basis, consumer prices increased by 0.7% in April, matching the pace recorded in the previous period.

The annual inflation rate in the UK rose to 3.3% in March 2026, up from 3% in each of the previous two months and in line with expectations. This marks the highest reading in three months. The increase was driven in part by transport costs, which rose by 4.7%, the fastest pace since December 2022. Motor fuels, in particular, climbed by 4.9%, making the largest upward contribution, largely due to the impact of the war with Iran. The average price of petrol increased by 8.6 pence per litre between February and March 2026 and diesel prices also rose sharply, up by 17.6 pence per litre. Housing and household services costs rose 4.3% (vs 4.2%), driven by a 95.3% surge in domestic heating oil prices, the highest increase since September 2022. Prices also accelerated for food and non-alcoholic beverages (3.7% vs. 3.3%) and services (4.5% vs. 4.3%). On the other hand, clothing prices fell by 0.8%, the steepest decline since March 2021. Compared to February, the CPI increased 0.7%.