UK inflation flat at 2.8% in May

LONDON - British inflation came in at 2.8% for May, unchanged from the 13-month low reached in April, official figures showed on Wednesday, a day before the Bank of England will announce its next interest rate decision.

Economists polled by Reuters had forecast a rise to 3.0% for May, as the U.S.-Iran war keeps British inflation almost a percentage point higher than the BoE had forecast in January.

Inflation has been above the BoE's 2% target for most of the past five years, and in April the BoE said it was likely to rise above 3.5% by the end of the year, and potentially exceed 6% early next year under the most adverse of three scenarios.

However, financial markets this week have drawn comfort from an apparent deal between the U.S. and Iran which promises to reopen the Strait of Hormuz, a major corridor for oil exports and is due to be signed in Switzerland on Friday.

Britain has been more affected than most Western countries by the conflict due to its reliance on imported natural gas.

Economists polled by Reuters expect the BoE's Monetary Policy Committee to vote 7-2 to keep rates on hold at 3.75%.

While Governor Andrew Bailey says the BoE has time to wait to assess the impact of the conflict, some policymakers worry businesses will use it to raise prices more broadly, or that it could dent households' confidence in the BoE inflation target.

A quarterly BoE survey, released last week, showed the public's expectations for inflation in five years' time were the highest since the series began in 2009 at 3.9%.

(Reporting by David Milliken)

Copyright Reuters or USA Today Network via Reuters Connect.

This story was originally published June 16, 2026 at 11:04 PM.