FX.co ★ UK Producer Inflation Matches Forecasts in May

Factory gate prices for UK-manufactured goods rose 4.0% year-on-year in May 2026, matching market expectations but easing slightly from an upwardly revised 4.1% in April, which had been the highest rate since May 2023. All ten product groups contributed positively to the annual rate, with the largest impact coming from a sharp increase in prices for coke and refined petroleum products (55.6% vs. 52.6% in April), driven by higher energy costs. Inflation slowed in several categories, including other outputs (2.7% vs. 4.3%) and alcoholic beverages and tobacco (0.6% vs. 2.9%). At the same time, two product groups experienced deflation but continued to make positive contributions to the overall index: motor vehicles and other transport equipment (-1.7% vs. 2.1% in April) and food products (-0.1% vs. 0.5% in April). On a monthly basis, factory gate prices increased 0.5% in May, down from an upwardly revised 1.5% rise in April and in line with market forecasts.