According to the Office for National Statistics, UK inflation eased slightly in May, with the consumer prices index (CPI) falling to 3.4% from 3.5% in April. The fall was primarily driven by sharp drops in petrol prices and air fares, the latter down from a 16.2% rise in April to a 3.9% fall in May. This reflects the earlier timing of Easter, which traditionally sees price hikes.
Core inflation, which excludes food, energy, alcohol and tobacco, also edged down from 3.8% to 3.5%. However, services inflation – closely watched by the Bank of England – fell more significantly from 5.4% to 4.7%, a positive sign after a period of stubbornly high figures.
Goods inflation increased from 1.7% to 2%, with price rises for food and furniture offsetting lower clothing and footwear costs. Food inflation alone jumped to 4.4% in May, up from 3.4% in April.
Despite the cooling headline figure, the Bank of England is expected to hold interest rates at 4.25% this week. While pressure is growing to cut borrowing costs – especially with recent data showing slower wage growth, rising unemployment, and a shrinking economy – officials remain cautious.
An earlier error in April’s CPI weighting cast slight doubt on recent figures, though corrections will apply to future data.
Economist Monica George Michail warned that inflation could stay above 3% through 2025 due to strong wage growth and higher Government spending, making the path to 2% slower than hoped.
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