UK inflation holds at 2.8% ahead of BoE call

UK consumer price inflation remained at 2.8% in the year to May 2026, unchanged from April and staying at a 13‑month low. Economists had expected an increase to 3.0%, making the flat reading a modest downside surprise. The figures indicate that overall price pressures are no longer accelerating, even as some components of the inflation basket continue to rise.

The headline rate reflects a balance between strong gains in specific categories and easing pressures elsewhere. The latest outcome keeps inflation above the Bank of England’s 2% target but closer to it than during the recent inflation surge, and it comes just days before the central bank’s next interest rate decision.

Core consumer prices, which exclude energy, food, alcohol and tobacco, rose by 2.6% year-on-year in May, up from 2.5% in April. The uptick suggests that underlying domestic price pressures have not yet fully subsided, even as the headline rate stabilises.

The move higher in core inflation contrasts with the flat headline rate, highlighting that the recent moderation has been driven partly by more volatile components such as food and some energy-related items. For policymakers, core inflation is a key gauge of the persistence of price growth in the broader economy.

Transport was the largest upward contributor to inflation in May, with air fares, vehicle taxes and petrol all pushing the index higher. These increases in travel and motoring costs added to household expenses and kept upward pressure on the overall inflation rate.

Offsetting these were slower rises in food prices, which recorded their weakest pace of increase in nearly a year and a half. Lower prices for items such as meat, vegetables, dairy and domestic heating oil also helped counterbalance the transport-driven gains, preventing the headline rate from rising above 2.8%.

The inflation data arrive immediately ahead of the Bank of England’s Monetary Policy Committee meeting. The Bank’s key interest rate currently stands at 3.75%, after the MPC opted to hold at that level at its most recent meeting. Economists widely expect the committee to keep rates unchanged again, with one poll indicating a likely 7‑2 vote in favour of holding.

Financial markets reflected a cautious interpretation of the figures. Government bond yields declined modestly after the release, with the 10‑year gilt yield moving lower. Market pricing indicates a high probability that rates will be left on hold at the upcoming meeting, as investors weigh stable headline inflation against a slight firming in core prices.

The combination of steady headline inflation, slightly higher core inflation and softer food price growth leaves the policy outlook finely balanced. The data provide the Bank of England with evidence that overall inflation is contained near recent lows while some underlying pressures, particularly in transport and services-related areas, remain in focus.