Consumer price inflation, UK: May 2026 + responses

Consumer price inflation, UK: May 2026

Chancellor of the Exchequer, Rachel Reeves said:

While the war in the Middle East pushes prices up globally, we have got the right economic plan and inflation has held steady.

We're protecting families and businesses from rising costs, with cuts in energy bills and freezes in fuel duty and rail fares.

This is the right economic plan to build a stronger more secure Britain.

Background information:

• We have taken targeted action to support people with the cost of living:

o   We have announced targeted support on heating oil and thanks to the Chancellor's decisions at the Budget last year - energy bills will fall by £117 from the beginning of April.That'slocked in untilthe end of June.

o   To shield families from future crises, the government is also setting out new measures to break the link between gas and electricity prices.

o   The government has launched the Great British Summer Savings scheme which will cut the VAT rate on eligible activities from 20% to 5% allowing families to enjoy discounted attractions and meals out this summer.

o   The Chancellor has slashed tariffs on over 100 items to bring down the cost of living. This is expected to save UK consumers around £230m - £370m a year.

o   In August, families travelling this summer will benefit from free bus travel for children.

o   The government has again extended the fuel duty cut to December 2026 meaning that by the end of this year the extension to the freeze on fuel duty will have saved the average driver £120 since 2025.

o   The Chancellor announced a 10p per mile increase in tax free mileage rates, backdated to April 2026; benefiting those who need to drive for work, from care workers to plumbers.

• And we are contingency planning for every eventuality.
• But we have been clear learning the lessons from 2022 that any support must be targeted,timely, and fiscally responsible, so that we help those who need it most without driving inflation or interest rates higher.

• Inflation fell to 2.8% in April - due in part to government measures in the budget to lower household energy bills. This was below market expectations of 3.0%.
• The UK was the only G7 economy other than Japan to have seen inflation fall in April. 
• This is in contrast the EU where inflation rose in almost every EU country,  only falling in 5 member states. 
• The OBR's forecast shows government policy will lead to a CPI inflation being 0.4 percentage points lower than it otherwise would've been in 2026/27.
• Before the escalation in the Middle East, it was forecast by the OBR and the Bank of England that inflation would fall to around the 2% target in April.  
• A significant driver of the May increase is vehicle excise duty. The ONS overstated the rise in vehicle excise duty in April 2025 and corrected it in May 2025 resulting in a 8.7% monthly fall. Because that pulled the figure down a year ago the annual comparison lifts measured inflation this May by around 0.1ppt.
• Airfares add a further 0.1ppt. Airfare prices are volatile month to month and tend to correct, so an unusually weak month is typically followed by a strong one. This April airfares fell because of an early Easter and we expect that to reverse in May. This reflects the timing of Easter rather than airlines raising prices. Together these two mechanical effects account for almost all of the rise from 2.8% to 3.0% in May, with underlying price pressures little changed. 

CBI

Alpesh Paleja, Deputy Chief Economist said:

Inflation was widely expected to pick up in May, so the latest data comes as a welcome surprise. But this is likely to be the calm before the storm, with price pressures set to see a pronounced rise over the coming months. The direct contribution from higher energy costs is set to increase  particularly with households' energy bills rising from June  and this is likely to feed through to other parts of the inflation basket.

That remains true despite the deal between the US and Iran to extend the ceasefire and reopen the Strait of Hormuz. Details of the agreement have yet to be finalised, and energy flows are unlikely to resume immediately, meaning it does little to alter the near-term outlook. Global energy prices also remain above their pre-conflict levels, and the lagged pass-through via supply chains means inflation is still likely to rise further over the coming months.

However, the deal does reduce the risk of the more severe inflation scenarios that had been feared if the conflict escalated further or energy infrastructure suffered additional damage. While households are still likely to face a prolonged squeeze on living standards, the outlook is now less challenging than it appeared only a few weeks ago.

TUC

Commenting on the latest CPI figures showing inflation holding steady at 2.8% in the 12 months to May 2026, TUC General Secretary Paul Nowak said:  

"Families up and down the country continue to face rising costs because of Trump's illegal war. And with the energy price cap lifting at the end of the month, bills are set to rise even further.  

"But over the last two months inflation has risen by less than the Bank of England expected  most likely because of wider economic weakness caused by the war. 

So with jobs and businesses under pressure, the Bank must continue to resist calls to raise interest rates. They should now go further and press ahead with rate cuts to support the economy.

It shouldn't be working people who bear the brunt of Trumpflation and the wider economic costs of this war.  

We need an emergency social tariff to cut bills for two thirds of households those that need it most  and the government must stand ready to support jobs and businesses during growing economic pressures.