Just when it seemed like inflation was finally cooling off in the UK, the latest data has delivered a reality check.
Despite earlier hopes, new figures show that the drop in consumer prices wasn’t as significant as expected in May—bringing more economic headaches for both households and the government.
What the Numbers Really Say
According to the Office for National Statistics (ONS), the Consumer Prices Index (CPI) inflation rate edged down slightly to 3.4% in May, compared to 3.5% in April.
That might sound like a win, but it’s not as promising as it looks on the surface.
In fact, the ONS admitted there was a data error last month: the vehicle tax figures were off.
Correcting that mistake would’ve made April’s rate 3.4% as well—meaning there was no real improvement between the two months. Still, the ONS is sticking to its original numbers.
A Blow to Economic Hopes and the Chancellor
Economists were banking on a bit more progress.
Most forecasts predicted May’s CPI rate would dip to 3.3%, so this news lands as a mild letdown—especially for Chancellor Rachel Reeves.
She’s made it clear that tackling inflation and easing the cost of living is the government’s top priority. In response to the latest numbers, Reeves acknowledged there’s still work to do:
“We know there’s more to do,” she said, highlighting recent steps like extending the £3 bus fare cap, funding free school meals for over 500,000 kids, and pushing ahead with plans for universal breakfast clubs in schools.
What’s Still Driving Prices Up?
While some costs fell—such as airfares and motor fuel—they were offset by price hikes elsewhere.
Food prices crept higher again, especially for items like meat and chocolate, and household goods like fridge freezers and vacuum cleaners also became more expensive.
ONS Acting Chief Economist Richard Heys described May as a tug-of-war between falling and rising prices.
“A variety of counteracting price movements meant inflation was little changed in May,” he explained.
Households Still Feeling the Pressure
This is all happening in the shadow of ‘awful April,’ when many routine bills jumped at once—driven by hikes in energy prices, water charges, council tax, mobile phone bills, and even TV licences.
The energy price cap alone went up by 6.4%, translating to an average £9.25 increase per household each month.
That increase helped push April’s inflation to its highest point in over a year.
Global Tensions Could Worsen the Outlook
Adding to inflation worries, oil prices have been climbing due to escalating tensions in the Middle East.
Israel’s recent military strike on Iran’s nuclear programme has raised concerns about potential disruptions in oil supply, which could ripple into higher fuel and energy prices here in the UK.
Considering how vital falling energy costs have been in easing inflation, this international development poses a fresh threat to the progress already made.