UK Inflation Stalls at 3.4%, Spotlight Shifts to BoE’s August Meeting

Britain’s cost-of-living pulse barely budged in May, with headline CPI stuck at 3.4%—the same pace (after correction) seen in April, the Office for National Statistics said on Wednesday.

A data glitch tied to vehicle taxes previously inflated April’s release to 3.5%, but the ONS confirmed both months should read 3.4%.

What moved—and what didn’t

• Transport pulled prices lower. Cheaper airfares (thanks to Easter falling earlier) and softer fuel costs trimmed the index.
• Core inflation eased. Stripping out energy, food, alcohol and tobacco, the rate cooled to 3.5% from 3.8%.
• Sticky spots remain. Higher grocery, furniture and household-goods prices offset part of the transport relief.

Richard Heys, the ONS’s acting chief economist, summed it up as a “tug-of-war” of price swings that left the overall reading flat.

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Market reaction

Sterling inched up about a quarter-percent to $1.345, underscoring that traders had largely priced in an unchanged print.

Policy implications

With inflation still miles above the Bank of England’s 2% target—and geopolitical risks keeping a floor under oil—rate-setters are expected to leave Bank Rate at 4.25% on Thursday and revisit easing prospects at the 1 August meeting. Pantheon Macroeconomics sees CPI creeping to a 3.6% peak in September, or 3.7% if energy prices stay elevated.

Treasury chief Rachel Reeves welcomed the plateau but conceded “there’s more work ahead” to anchor prices. Much of that work now rests on whether energy markets calm and the labour market softens enough to give the BoE room to cut before year-end.

Alexander Stefanov

With over 8 years of experience in the cryptocurrency and blockchain industry, Alexander is a seasoned content creator and market analyst dedicated to making digital assets more accessible and understandable. He specializes in breaking down complex crypto trends, analyzing market movements, and producing insightful content aimed at educating both newcomers and seasoned investors. Alexander has built a reputation for delivering timely and accurate analysis, while keeping a close eye on regulatory developments, emerging technologies, and macroeconomic trends that shape the future of digital finance. His work is rooted in a passion for innovation and a firm belief that widespread education is key to accelerating global crypto adoption.