UK inflation held at 3.4% in May, the Office for National Statistics (ONS) has revealed, ahead of the Monetary Policy Committee’s base rate announcement tomorrow.

The latest data comes after consumer price index (CPI) inflation increased from 2.6% in March to 3.3% in April

Month-on-month, the CPI inflation rate increased by 0.2% in May, compared to 0.3% in the same month a year previously.

The ONS found that while there were drops in fuel and air travel prices, food inflation increased from 3.4% in the 12 months to April to 4.4% in May, which is the largest increase since February 2024.

Chief executive officer at Movera, Nick Hale, said that the latest inflation data provides room for thought for businesses and consumers.

He commented: "A steady inflation reading offers breathing space — for policymakers, for lenders, and for movers. After a protracted period of volatility, steady CPI figures help reinforce the sense that we’ve turned a corner, even if only slightly. It’s not yet a green light for rate cuts, but it’s a useful pause.

"With inflation still above target and wage growth holding firm, the Bank of England remains boxed in — cautious not to overstimulate before the disinflation trend is secure. That might frustrate some in the housing market, but for conveyancers and brokers, it creates a working window: a moment of relative consistency where client decisions aren’t being undone by fast-moving economic variables."

However, CEO at Just Mortgages and Spicerhaart, John Phillip, added that while a continued level of inflation can be useful, external forces may be set to cause price increases elsewhere.

He concluded: "While stability is good, I still wouldn’t be planning my rate cutting party for tomorrow’s MPC decision as the central bank is likely to keep to its careful and gradual approach. That is also true given fresh escalation in the Middle East which is likely to cause volatility – particularly when it comes to oil prices – and push costs higher.

"Away from geopolitical tensions, there are some positives on the horizon for inflation – most notably the 7% cut to the energy price cap in July – which will have a positive influence on inflation.

"Alongside its own predictions on inflation, the central bank will be paying close attention to a rise in unemployment and an economy that is shrinking. This will no doubt play into its decision making and will encourage some movement on the base rate. Improving swaps will create opportunities for lenders, which will be welcome for potential borrowers."

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