UK inflation holds at 3.4% despite rising food prices

The UK's inflation rate, measured by the Consumer Prices Index (CPI), remained steady at 3.4% in May 2025, the same as it was for April after correction for an earlier calculation error. This period marked ongoing economic pressures stemming from rising food costs, while transport prices, specifically airfares and fuel, saw declines, helping to balance the overall inflation rate. Factors contributing to the inflation figures included rising labour costs, increased energy prices due to geopolitical tensions, and notable hikes in food-related prices driven by poor harvests affecting key commodities like cocoa, sugar, and oils. The Office for National Statistics (ONS) acknowledged an overstatement of the inflation rate for April caused by miscalculating vehicle excise duty data. While airfares decreased due to the timing of Easter which influenced seasonal pricing, some areas of retail saw price increases, including furniture and household goods, which contributed to the inflation stability. The report indicated that food price inflation escalated to 4.4% in May, the highest observed since February 2024, suggesting that consumers were beginning to feel the pinch of rising living costs more acutely. Consequently, economists warned that persistent inflation could complicate the Bank of England's decision-making concerning interest rates. Policymakers were anticipated to maintain rates at 4.25% amidst a tangled environment of wage growth and economic uncertainty driven in part by international events. The Bank's target for inflation is 2%, and the persistent inflationary pressures have led to increased scrutiny and calls for action to stabilize economic conditions for households. Political figures responded to the data by emphasizing the ongoing challenges in controlling inflation and supporting working families. With the UK government committed to fiscal strategies aimed at easing burdens caused by rising prices, the outlook remains uncertain, particularly in light of geopolitical tensions affecting global oil supply. Overall, the latest inflation figures illustrate a complex landscape of price stability amid emerging risks, reflecting economic realities that both the government and the central bank will need to navigate in the coming months.