Inflation cools slightly in May as fuel costs dip

Danni Hewson
18 June 2025
  • CPI fell to 3.4% in the 12 months to May
  • The official figure for April of 3.5% has not been amended but the ONS has confirmed the figure should have been 3.4%
  • Fuel and flights played a big part in the fall, with petrol prices down 2.1 pence a litre in April to May
  • Food inflation jumped from 3.4% to 4.4% – the highest since February 2024
  • Bank of England still expected to hold base rate when it meets tomorrow

Danni Hewson, AJ Bell head of financial analysis, comments on the latest UK inflation figures:

“The problem with inflation data is that it’s looking back at what has already happened, whilst households have to look forward at what is to come.

“The price at the pump played a big part in the slight fall in headline inflation but the escalating conflict between Israel and Iran has impacted the oil price in the past week, with UK motorists already bracing themselves for hikes and airfares also expected to soar.

“After the impact of all those bill increases during ‘Awful April’, shoppers wheeling their trollies down supermarket aisles will have noticed the rise in food prices which have shot up at the fastest rate in over a year. And anyone needing to replace white goods like fridges and freezers will also have had to pay more.

“There has been some confusion about last month’s inflation rate because of an error in vehicle excise duty numbers, so people might be puzzled by differing headlines.

“But they won’t be confused about their own personal circumstances. Budgets will have been strained by increases to bills like water, energy, council tax and broadband, making increases in the cost of the weekly shop doubly difficult to deal with.

“Whether the headline rate has fallen slightly or held steady, it’s still significantly above the Bank of England’s target of 2%. Market expectation of a rate cut by the MPC when it meets tomorrow has actually climbed slightly to 12% and looking at today’s figures there could be a degree of wiggle room.

“Both core inflation and service sector inflation have fallen in the past month, and rate setters may want to get ahead of potential volatility in order to stimulate a flatlining economy which looks perilously close to toppling towards stagflation. But with such uncertainty and volatility, staying put might seem like the only smart move.”

Danni Hewson
Head of Financial Analysis
Danni spent more than 19 years at the BBC, presenting and reporting on business news across a variety of programmes – including BBC Breakfast, BBC News Channel, BBC Look North and latterly Radio 5 Live’s flagship business programme ‘Wake up to Money’. She is now responsible for producing analysis and commentary across a broad range of subjects at AJ Bell, from financial markets, to economics and personal finance.

Contact details

Mobile: 07593 451 437

Email: danni.hewson@ajbell.co.uk

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