Inflation steady but unlikely to ease soon

17 June 2026

Inflation remained at 2.8% in the year to May as the pace of food price rises slowed to a 17-month low, according to 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 overall 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 its implementation 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 will respond, later this year, if inflationary pressures persist.

“With business confidence still fragile, firms need clear signals and practical support. The government must ease cost 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.”

More detail on the ONS data can be found here.