Benign UK Food Inflation Keeps CPI Below 3 Percent

UK inflation remains subdued at 2.8% due to falling food prices, prompting expectations that the Bank of England will hold rates steady.

Key Takeaways

• 1.UK headline CPI unexpectedly remained at 2.8% in May, largely due to benign food inflation.
• 2.Inflation is expected to peak around 3.5% in September before declining, supported by falling natural gas futures.
• 3.The Bank of England is expected to maintain a prolonged pause in rate hikes, with a return to cuts in 2027.

Table of Contents

• Benign UK food inflation keeps CPI below 3%
• Producer prices point to lower food inflation into summer
• The BoE's 'core services' measure has stabilised below 4%

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