| CPI May 2026 | 2.8% - unchanged from April |
| CPIH (incl. housing) | 3.0% |
| Food prices | Slowest rise in 17 months |
| Transport costs | Rising at fastest rate of any category |
| OECD forecast | CPI to reach 4% in 2026 - second highest in G7 |
| BoE target | 2% - above target since 2021 |
Last reviewed: 18 June 2026
UK CPI inflation held at 2.8% in the year to May 2026, unchanged from April and below the 3% many economists expected. CPIH held at 3.0%. Food price rises slowed to their lowest rate in 17 months. Transport costs rose at the fastest rate of any category - a direct consequence of Iran conflict energy price increases feeding through to fuel and logistics. RPI came in at 3.1%, up from 3.0%. The May figure was published on 17 June and contributed to the Bank of England's decision today to hold rates at 3.75%.
Why Inflation Is Likely to Rise Again in Late 2026
The initial spike in global oil and gas prices from the Iran conflict has not yet fully worked through to household energy bills and business costs. Ofgem reviews the domestic energy price cap quarterly. The October 2026 cap revision is expected to reflect higher wholesale prices from earlier in the year. The OECD's updated economic outlook published today projects UK CPI reaching 4% in 2026 - the second highest in the G7 after the United States - and cut UK GDP growth to 0.7% from 1.2%, the largest single downgrade in the update.
What This Means for Energy Bills
The October 2026 Ofgem price cap revision is the one to watch. It will set unit rates based on wholesale prices from the preceding period and the consensus expectation is for a further increase. For households concerned about costs in the second half of 2026, switching to a fixed tariff before October locks in current unit rates. Energy efficiency measures reduce consumption and therefore the impact of any per-unit price increase. The Warm Home Discount scheme and Cold Weather Payment remain available to eligible households.
What This Means for Food Prices
The slowdown in food price inflation to a 17-month low is genuinely positive for household budgets, particularly for lower-income households where food represents a larger spending share. However, prices remain significantly higher than pre-2022 levels - inflation has slowed, not reversed. Transport cost inflation is an indirect food cost risk: sustained higher fuel and logistics costs tend to pressure food retail margins and prices over a 6-12 month horizon.
What This Means for Mortgage Holders and Savers
A May CPI reading below expectations reduces immediate pressure on the MPC to raise rates. However, if the OECD's forecast of 4% CPI by end-2026 proves accurate, the question is not whether rates will rise but when. Variable rate and tracker mortgage holders should not assume current stability extends indefinitely. For savers, the current environment of savings rates above 4% represents positive real returns that are narrowing as inflation moves back toward and potentially above the savings rate.
Frequently Asked Questions
What is UK inflation right now?
UK CPI inflation was 2.8% in the year to May 2026, unchanged from April. CPIH including housing costs was 3.0%. RPI was 3.1%. The Bank of England's target is 2%. Inflation has remained above target since 2021, with the Iran conflict adding upward pressure to energy prices in 2026.
Will energy bills go up again in October 2026?
Ofgem's October 2026 price cap revision will reflect wholesale energy prices from the preceding period. Given elevated wholesale prices from the Iran conflict earlier in 2026, the consensus expectation is for a further increase in unit rates from October. The cap has not been set as of 18 June 2026. Switching to a fixed tariff before the October revision locks in current rates.
Why is UK inflation higher than other countries in 2026?
The OECD projects UK CPI at 4% in 2026, second highest in the G7. The UK is more exposed to global energy price volatility than some peers because it imports a significant share of gas and is more reliant on gas-fired power generation. Energy purchases make up around 8% of average household spending, making the pass-through from global energy prices to domestic inflation direct and relatively swift.
