UK Inflation Slows to 3.4% as Food Prices Climb, But Transport Costs Drop

UK Inflation Slips Slightly But Food Prices Keep Pressure On

Inflation in the UK ticked down only marginally in May 2025, landing at 3.4%. That’s just a notch lower than 3.5% the previous month, but the story behind those numbers reveals bigger shifts. While many folks might have noticed their weekly shop getting pricier, those flying off on holiday probably spotted a welcome relief: the cost of travelling by air has taken a tumble.

The Consumer Prices Index (CPI) number might not spark much excitement at first glance—I mean, a 0.1% drop isn’t exactly headline-grabbing. But dig a little deeper and you see the effects hitting everyday life. The annual inflation for goods jumped to 2.0%, the highest mark since last November. What’s pushing that? Food bills are climbing again. Everything from basic groceries to household items is creeping up in price, making it tough for families trying to keep budgets in check.

On the flip side, services inflation—which covers things like going out, energy bills, and travel—slid to 5.3%. That’s the lowest rate seen since the beginning of last year. Most of that drop came from cheaper air travel. If you’ve booked a trip recently, you probably noticed some of the lowest fares in months. Transport, in general, keeps serving as a counterweight to those spiking food prices, with lower vehicle travel costs and changes to Vehicle Excise Duty data helping drag overall service prices downward.

Bank of England Eyes Rate Cuts Amid Mixed Signals

So, where does this leave the Bank of England? The ongoing question is when, or if, the central bank will trim interest rates. Pressure is mounting as inflation slowly eases, but policymakers are still cautious.

One big variable is wage growth—salaries are still going up across many sectors, which can make inflation stubbornly sticky. At the same time, there’s uncertainty hanging over Britain’s economy, thanks in part to unpredictable US trade policies that could shake up global supply chains and prices.

For now, the Bank of England is trying to strike the right balance. On one side, food and household goods are keeping the heat on families, especially those on lower incomes. On the other, cheaper transport services offer some relief, but not enough to outweigh the broader pressures most households feel.

Analysts keep flagging those unpredictable risks for the months ahead. Rising wages, for example, can mean more pocket money for consumers, but also lead businesses to pass the extra costs on. And let’s not forget the possibility of new trade barriers or tariffs shaking things up between the UK, the US, and other major markets. With inflation still well above the Bank of England’s 2% target, each new piece of data will keep policymakers—and everyone else—on their toes.