The figures follow a dip in headline CPI to 2.8% in April, partly attributed to reductions in domestic energy bills introduced under last year’s Budget. Despite the unchanged reading, inflation remains above the Bank of England‘s 2% target, with the Monetary Policy Committee due to set interest rates on Thursday.
The Consumer Prices Index (CPI) rose by 2.8% in the 12 months to May 2026, unchanged from the 12 months to April 2026.
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— Office for National Statistics (ONS) (@ONS) June 17, 2026
The steady reading is widely expected to reinforce the MPC’s decision to hold Bank Rate at 3.75% when it announces at noon tomorrow. Markets had already priced out a rate hike for this month, and a second successive month of stable inflation removes one argument for an immediate hike — though the Bank’s own projections point to CPI peaking at 3.6–3.7% by the end of the year, keeping the committee’s tone cautious rather than dovish.
With services inflation rising to 3.7% and energy risks from the Middle East still live, lenders are unlikely to reprice aggressively downward in the near term, meaning borrowers coming off fixed deals in the months ahead should not expect a swift improvement in available rates.
Policymakers are assessing the economic impact of the Middle East conflict. The closure of the Strait of Hormuz has pushed oil prices higher over recent months, with downstream effects on fuel, chemicals and fertiliser costs. An agreement between the United States and Iran, reached earlier this week, is expected to reopen the shipping route and ease some of those pressures in the weeks ahead.
“With inflation holding steady, there will be a degree of reassurance that price pressures are not continuing to accelerate,” said Nathan Emerson (pictured right), chief executive officer at Propertymark. “However, inflation remains above the Bank of England’s 2% target, highlighting that there is still work to be done before the wider economy returns to more normal conditions.
