Inflation holds steady at 2.8 as food price rises ease

Inflation held steady at 2.8% in May, according to the Office for National Statistics, matching April and defying economists who expected a rise to 3%. The reading signals that price growth remains evident but was offset by opposing movements across categories. Transport costs provided the main upward pressure, led by airfares, vehicle taxes, and petrol. In contrast, weaker food prices helped temper the overall pace. The data also showed energy costs staying influenced by earlier trends, though domestic heating oil prices fell. Average petrol rose to 157.4 pence per litre, up 0.6p from April, helping transport inflation around 6.8% for May.

Food and non-alcoholic drinks inflation decelerated to 2.2% from 3% in April, with declines in beef, ham and some dairy products contributing to the easing. Lower energy prices under the Ofgem cap supported household bills, though fuel costs remain a pressure area. Bank of England rate-makers are watching the data for clues on policy, with forecasts varied on whether inflation will accelerate later in the year as geopolitical risks persist. Chancellor Rachel Reeves framed the May figure as evidence that the government's plan shields families and businesses from rising costs, even as international tensions press prices elsewhere.