UK CPI inflation was 3.4% YoY in May, down slightly from 3.5% YoY in April and in line with expectations. Monthly inflation eased to 0.2% MoM from 0.3% MoM in May 2024.

• Core CPI slowed to 0.2% MoM and 3.5% YoY from 3.8% YoY in April, below expectations of a 3.6% YoY reading.
• Goods inflation rose to 2.0% YoY (highest since November 2023), up from 1.7% YoY in April, with the monthly rate at 0.4% MoM vs flat a year ago.
• Services inflation decelerated to 4.7% YoY in May from 5.4% YoY in April. On a monthly basis, services prices dropped -0.1% MoM, much cooler than the 0.6% MoM increase a year ago.

• The largest downward contribution came from transport prices, down -1.8% MoM. Air fares fell by 5.0% MoM between April and May 2025, compared with a large rise of 14.9% MoM between the same months in 2024. These movements were influenced by the timing of Easter and the associated school holidays.
• Upward pressure came from food and non-alcoholic beverages (+0.7% MoM, 4.4% YoY), clothing and footwear (+0.8% MoM, -0.3% YoY), and furniture and household goods (+1.5% MoM, 0.8% YoY).
• The softening in core and services inflation suggests some easing in underlying price pressures despite lingering volatility in food and goods prices.