Inflation remains at 2.8%, slightly lower than expected

Inflation remained at 2.8% in the year to May according to new figures.

Inflation had slowed to its lowest level for more than a year in April because of a decline in household energy prices for the month.

Over the year to May, transport costs rose by the fastest rate, the Office for National Statistics (ONS) said, while the rate of price increases in food and non-alcoholic beverages slowed.

Inflation — the rate at which the cost of goods and services is rising — is widely expected to keep steadily increasing over the coming months due to the ongoing impact of the Iran war.

Many economists have predicted that it would peak at between 3.5% and 4% in the second half of 2026, as the effects of the conflict in the Middle East filter down to household costs.

It comes ahead of the Bank of England's next interest rate decision on Thursday. Economists widely expect the Bank to hold the core interest rate at its current level of 3.75%.