U.K. consumer price inflation rose more than expected in May, largely driven by the previous month's steep increase in air-fares, smaller decrease in fuel costs and a rise in clothing prices, a report from the Office for National Statistics showed Tuesday.
The rate of inflation rose to 2.7 percent in May from 2.4 percent in April. Economists expected an increase to 2.6 percent. This confirms that April's drop from 2.8 percent in March was mainly due to the timing of Easter last year.
The largest upward contributions to the change in the inflation rate in May came from transport, notably air transport and motor fuels, as well as clothing, the statistical office said.
"May's rise in inflation confirmed that April's fall was primarily the result of some temporary factors," said Vicky Redwood, chief U.K. economist at Capital Economics. "That said, the peak is hopefully not too far away now."
Air fares climbed 21.3 percent year-on-year in May following 0.8 percent rise in April. Though petrol and diesel prices both fell between April and May, the decline was smaller than a year ago. Clothing and footwear prices also had an upward impact on inflation in May with an annual increase of 0.7 percent.
"We expect inflation to peak just above 3 percent over the summer and then to start coming down gradually from the fourth quarter," IHS Global Insight Chief Economist Howard Archer said. "However, much will depend on oil prices which have regained some of their losses," he added.
The core inflation that excludes price changes in energy, food, alcoholic beverages and tobacco, rose to 2.2 percent in May from 2 percent in April. On a monthly basis, headline CPI rose 0.2 percent, at the same pace as in the previous month. Economists had forecast a 0.1 percent rise.
"Underlying price pressures should be contained over the coming months by significant excess capacity, further moderate wage growth amid appreciable labor market slack, and limited scope for retailers to rise prices given still significant pressures on consumers," IHS's Archer said.
Separate data from the ONS revealed that pipeline pressures remained muted with both output and input prices rising at weaker-than-expected pace.
The output price inflation at British manufacturers rose to 1.2 percent in May from 0.9 percent in April. This was below expected rate of 1.4 percent. Between April and May, factory gate prices remained unchanged, in line with forecasts.
The core factory gate prices, that excludes the more volatile food, beverages, tobacco and petroleum products, rose 0.8 percent year-on-year compared with an expected 0.9 percent rise.
In the year to May, input costs faced by manufacturers rose 2.2 percent. This compared with forecast of 2.5 percent increase and follows a 0.1 percent fall in April. On a monthly basis, input prices fell 0.3 percent while expectations were for a flat outcome.
The Bank of England expects inflation to peak at around 3 percent in the third quarter of this year. The policymakers at the central bank have rejected Governor Mervyn King's repeated calls for more stimulus as most of them remained concerned about risks to inflation.
Economists are now waiting for Mark Carney to take over as the bank's new Governor in July. They, however, do not expect him to announce major steps in his first meeting in July, but did not rule out a new round of stimulus in the second half of the year.
Capital Economics' Redwood said inflation may get back to Bank of England's 2 percent target around the start of next year. "Overall, then, the inflation outlook should not prevent Mr Carney from giving the economy more policy support in order to achieve escape velocity," the economist added.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.