FX.co ★ UK Inflation Surprisingly Holds at 2.8%

The UK’s annual inflation rate held steady at 2.8% in May 2026, unchanged from April and below market expectations of 3.0%. It remained at its lowest level since March of the previous year.

Inflation eased in several key categories. Housing and household services slowed to 2.7% from 3.0% in April, the weakest pace in nearly two years, as owner-occupiers’ housing costs continued to moderate. Food and non-alcoholic beverage inflation decelerated further, falling to 2.2% from 3.0% and reaching its lowest rate since December 2024. Price growth also cooled in clothing and footwear (0.2% vs. 0.7%) and in recreation and culture (1.5% vs. 1.7%).

These downward pressures were partly offset by a sharp pickup in transport inflation, which climbed to 6.8% in May from 4.5% in April, its highest level since December 2022. The increase was driven by higher motor fuel prices, rising air fares, and the impact of an increase in vehicle excise duty (VED).

On a monthly basis, the consumer price index (CPI) rose 0.2% in May, below forecasts of a 0.4% gain and down from a 0.7% increase in April.