Must read: UK inflation remains at 2.8% in May
ii’s head of investment rounds up the morning’s big news.
17th June 2026 09:32
by Victoria Scholar from interactive investor
UK CPI inflation for May hit 2.8% year-on-year, below expectations for a rise to 3%. The monthly figure was also better than expected rising by 0.2% versus forecasts for 0.4%. Core CPI, which strips out the more volatile components came in at 2.6% year-on-year, a touch better than expectations for 2.7%.
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There were several push and pull factors that netted off to keep inflation unchanged in May. Food inflation eased with meat, dairy and fish becoming cheaper, offset by higher transport costs with air fares, petrol prices and vehicle taxes becoming more expensive.
Today’s softer-than-expected inflation data strengthens the case for the Bank of England to keep interest rates on hold on Thursday, refraining from any monetary tightening this week. Its current strategy is to buy time to digest the extent of any inflation pass through from this year’s Iran-war energy shock.
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Despite falling oil prices and a peace deal between the US and Iran, UK inflation is expected to increase over the summer after the next Ofgem price cap in July, when we will likely arrive at peak inflation, so for now today’s data looks like the calm before the storm.
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