May UK CPI remained at 2.8% YoY, below BoE projections, with services inflation rising to 3.7% despite softer goods prices.
UK headline inflation remained unchanged at 2.8% year-on-year in May, missing both Bloomberg consensus estimates and the Bank of England’s April Monetary Policy Report projection by 0.2pp and 0.5pp, respectively. Core inflation ticked up 0.1pp to 2.6% YoY, driven by stronger services and fuel inflation, which offset declines in food and goods prices.
Services inflation rose 0.5pp to 3.7% YoY, though it still fell 0.2pp short of the BoE’s April forecast. Base effects, including a correction to last year’s overestimated Vehicle Excise Duty increase, contributed 0.25pp to services inflation. Easter-related airfare adjustments and sea transport also added 0.15pp and nearly 0.1pp, respectively.
The data highlights persistent inflationary pressures in services, contrasting with easing goods prices, complicating the BoE’s policy outlook ahead of its next decision.