Further reactions to Inflation statistics

Conservative Party

Sir Mel Stride, Shadow Chancellor, said:

"Prices are still rising too fast - and Labour still don't understand why.

"Thanks to Labour's choices the UK went into the latest energy crisis with the highest inflation in the G7. Rachel Reeves has increased the deficit by 75% and those lining up to replace Keir Starmer want to borrow even more. Reform promise the same irresponsible approach, announcing tens of billions in unfunded promises in their desperation to win the Makerfield by-election. 

"Only the Conservatives have a leader with the backbone and strong team needed to build a stronger economy and get Britain working again."

Andrew Griffith, Shadow Business & Trade Secretary, said:

The shocker in today's numbers is the fact business costs have gone up by almost 9% over the last year.

"Thanks to Labour's lethal cocktail of tax rises and red tape more firms are closing, more jobs will be lost and customers will pay higher prices.

"Everyone's paying the price for Rachel Reeves's bad choices. Only the Conservatives have a plan to cut business costs and get Britain working again."

IoD

Commenting on today's data from the Office for National Statistics, which showed the annual rate of CPI inflation stable at 2.8% in May 2026, Anna Leach, Chief Economist at the Institute of Directors, said:

Inflation has once again come in lower than expected in May, as rising fuel inflation was offset by lower rates in other categories, like food, clothing and recreation and culture. Some recent policy measures will also help push down on inflationary pressures for households in the coming months, including temporary VAT reductions on leisure activities and the extension of the fuel duty freeze.  

Today's steady inflation rate should be more than enough for the Bank of England to keep rates on hold this month. But even a swift end to the Iran conflict will leave global energy supplies disrupted and prices elevated for a considerable period, driving inflation towards 4% by the end of the year. To minimise the risk that inflation becomes embedded, government needs to think more deeply about the drivers of price increases. Rising energy, tax and employment costs affecting businesses need addressing if broader inflationary pressures are to be minimised.

British Chambers of Commerce

Responding to the latest inflation data from the Office for National Statistics, Caterina Batog, Research & Economics Analyst,at the British Chambers of Commerce,said: 

"Inflation holding at 2.8% in May is better than expected but businesses remain under sustained cost pressure. While there was a surge in transport costs, this was offset by softer price pressures across food, household goods and restaurant bills. 

But prices are still rising, and firms are battling with higher energy and wage bills, as our data shows. 

  
While there has been progress on a framework deal to end the Iran conflict, there is still doubt around itsimplementation and whether it will hold. But if it does, then falling oil prices could help offset the impact of inflation.  

However, while any durable easing of tensions is positive news, businesses are unlikely to increase investment while so much uncertainty remains. 
 
The BCC's latest economic forecast suggests inflation could rise to around 3.8% by the end of the year, driven in part by the higher energy prices and shipping costs linked to the conflict.   

While the Bank of England is expected to hold interest rates tomorrow, uncertainty remains over how it willrespond, later this year, if inflationary pressures persist.  

With business confidence still fragile, firms need clear signals and practical support. The government must easecost pressures, including action on high energy prices and ensuring the business rates system does not add to the burden. 
 
Over the longer term, strengthening the UK's resilience will depend on boosting investment, supporting export growth and helping firms adopt new AI technologies more swiftly to drive productivity." 

Resolution Foundation 

Confounding market expectations of a jump to 3 per cent, UK CPI inflation held at 2.8 per cent in May  but recent welcome falls in energy prices suggest a lower path for inflation in the months ahead, the Resolution Foundation said today (Wednesday).  

Inflation had been expected to jump in May, largely reflecting earlier falls in airfares and an error in the recording of Vehicle Excise Duty dropping out of the twelve-month calculation.  

In the event, although both of those factors pushed up on inflation, rises in airfares were smaller than expected and both were balanced out by a welcome small fall in food prices from April to May. Food inflation was 2.2 per cent in May, well below the Bank of England forecast of 3.5 per cent.    

There has been even better news for families as optimism about a peace deal in the Middle East has led to sharp falls in energy prices. Brent crude has fallen from over $130 per barrel at the start of April to under $80 per barrel in recent days, bringing prices close to pre-war levels. There have also been large falls in wholesale gas prices.  

This is most welcome for families struggling with the cost of essentials as it suggests lower than expected energy prices this winter. It is also good news for mortgagors as lower inflation reduces the need for the Bank of England to raise rates.  

James Smith, Chief Economist at the Resolution Foundation, said: 

There was good news on inflation this morning as the rise expected in May failed to materialise and there was an unexpected fall in food prices.  

The even better news is that signs of peace in the Middle East mean that energy prices have tumbled. This likely reduces pressures on struggling families this winter and reduces the likelihood of rate rises from the Bank of England.