UK inflation remained unchanged at 2.8% in May, despite a sharp rise in fuel costs linked to conflict in the Middle East.
Figures from the Office for National Statistics (ONS) this morning showed the Consumer Prices Index (CPI) held steady last month, defying expectations of an increase to 3%.
Motor fuel prices rose by 24.6% during May – the steepest monthly increase since September 2022 – as tensions involving Iran pushed up global energy prices.
Economists expect inflationary pressures to build in the months ahead, with forecasts suggesting CPI could peak between 3.5% and 4% later this year.
There may be some relief on the horizon, however, after the US and Iran reached a preliminary agreement aimed at ending the conflict.
The development has helped drive oil prices lower, with Brent crude falling to a three-month low of $78 per barrel overnight.