Latest Office for National Statistics (ONS) data has shown that inflation stood at 3.4% in May 2025 down 0.1% on April 2025 with rises in food and furniture costs offset by lower air fares and petrol prices.
Annualised inflation was forecast to come in at 3.4% whilst core inflation came in at 3.5% in the 12 months to May, down from the 3.8% in April and lower than forecast.
Commenting on today’s inflation figures for May, ONS acting Chief Economist Richard Heys said “A variety of counteracting price movements meant inflation was little changed in May. Air fares fell this month, compared with a large rise at the same time last year, as the timing of Easter and school holidays affected pricing. Meanwhile, motor fuel costs also saw a drop.
“These were partially offset by rising food prices, particularly items such as chocolates and meat products. The cost of furniture and household goods, including fridge freezers and vacuum cleaners, also increased.”
Anna Leach, Chief Economist at the Institute of Directors, said “There were few surprises in today’s inflation data, as the impact of the Ofgem price cap rise, other regulated price increases and the passthrough from higher employment costs continues to keep inflation outside the target range. Inflation is expected to remain elevated in the months ahead due to these factors. Meanwhile, volatility in transport data, exacerbated by an error in the VED data, has unwound this month, and services inflation has fallen back in line with the Bank of England’s expectations.
“Price expectations amongst businesses and households remain uncomfortably high, but downside risks to growth are increasing. Despite some recovery, the overall confidence of business leaders in the economy remains significantly down on a year ago following a damaging Budget for business and a sharp rise in tariff uncertainty. A chunky decline in goods trade with the US in April underscores the UK’s exposure to trade risk. Meanwhile, developments in the Middle East are driving volatility in oil prices, which may prove inflationary. The MPC has a difficult balance to strike in guiding inflation down to target sustainably, and odds remain for a hold in the forthcoming MPC decision.”
Neil Rudge, Chief Banking Officer for Commercial at Shawbrook said “A dip in inflation will be welcome news to SMEs after April’s rise, but the modest decline makes one thing clear: the pressures facing small businesses aren’t going anywhere fast.
“SMEs are being required to absorb more and more – higher wages, increased employer National Insurance contributions and ever rising material costs to name a few – but often without the profit margins required to do so.
“Many of these businesses will be holding onto the prediction that inflation will fall more significantly towards the end of the year as a lifeline, but as the global economy continues to be rocked by geopolitical uncertainty, there is no guarantee that this will materialise. Signals of support in Rachel Reeves’ spending review may also provide some further hope, but business leaders remained unconvinced that it offers enough. To truly support the UK’s SMEs, the Government must prioritise access to flexible finance and help these businesses manage the volatility that will undoubtedly persist.”
Suren Thiru, ICAEW Economics Director said “These figures suggest that the UK’s economic fortunes took a notable nosedive in ‘Awful April’ as skyrocketing bill and tax rises, coupled with the chaos over US tariffs, suffocated overall output.
“April’s decline is probably the start of a more sobering period for the UK economy with the damage from spiralling costs and intensifying global uncertainty set to slow growth sharply this quarter, despite elevated government spending.
“Weaker growth is a headache for the Chancellor as it makes generating the revenue government needs to support its sizable spending plans more difficult, increasing the chances of further tax rises in the Autumn Budget.
“Though the door is probably closed on an interest rate cut next week, these downbeat figures increase the likelihood of a policy loosening in August, despite lingering concerns over high inflation.”
George Lagarias, Chief Economist at Forvis Mazars said “UK inflation remains elevated, without including the latest jump in energy prices. Consumers are beginning to feel the heat of inflation again. Prices for food, clothing, furniture, household goods and restaurants rose, and were really only offset by transportation costs. With the war in the Middle East pushing energy prices higher, that transportation offset might very well disappear by the next month. The Bank of England is being proven right to wait before cutting rates. We wouldn’t be too surprised if the central bank ended up delivering less than two rate cuts until the end of the year.”