NEW BLOW FOR RACHEL REEVES AS INFLATION STAYS AT 3.4 PER CENT - DESPITE HOPES IT WAS DUE TO FALL

UK inflation defied expectations of a fall today as Rachel Reeves' hopes for the economy suffered another blow.

Official figures showed headline CPI stuck at 3.4 per cent in May, worse than the 3.3 per cent analysts had pencilled in.

Rising food prices offset easing air fares and transport costs, dashing hopes that Brits would get some respite after 'Awful April' bill hikes pushed prices up at their highest pace for a year.

Economists said the 'dismal' numbers meant the Bank of England is almost certain to hold off cutting interest rate cuts when the Monetary Policy Committee meets tomorrow. Ministers have been looking to Threadneedle Street to help kick-start UK plc's stalling activity. 

Ms Reeves admitted there was 'more to do' to tackle the cost of living, insisting her 'number one mission is to put more money in the pockets of working people'.

The ONS recorded April's inflation rate at 3.5 per cent but later disclosed an error in vehicle tax data, saying the level should have been 3.4 per cent.

Ms Reeves said: 'We took the necessary choices to stabilise the public finances and get inflation under control after the double digit increases we saw under the previous government, but we know there's more to do. 

'Last week we extended the £3 bus fare cap, funded free school meals for over half a million more children and are delivering our plans for free breakfast clubs for every child in the country. 

'This Government is investing in Britain's renewal to make working people better off.'

But shadow chancellor Sir Mel Stride said: 'This morning's news that inflation remains well above the 2 per cent target is deeply worrying for families.

'Labour's choices to tax jobs and ramp up borrowing are killing growth and stoking inflation - making everyday essentials more expensive.'

Analysing the figures, ONS acting chief economist Richard Heys said: 'A variety of counteracting price movements meant inflation was little changed in May.

'Air fares fell this month, compared with a large rise at the same time last year, as the timing of Easter and school holidays affected pricing. Meanwhile, motor fuel costs also saw a drop.

'These were partially offset by rising food prices, particularly items such as chocolates and meat products. The cost of furniture and household goods, including fridge freezers and vacuum cleaners, also increased.'

The figures mean prices were still rising in May at a similar rate to April when a raft of bills increased for households up and down the country.

The energy price cap, set by regulator Ofgem, rose by 6.4 per cent in April, resulting in bills for a typical household rising by £9.25 a month.

Steep increases to water charges, and rises for council tax, mobile and broadband tariffs , and TV licences were among those to take effect.

Meanwhile, oil prices have been rising in recent days since Israel launched an attack on Iran's nuclear programme, raising concerns that the supply of crude from the Middle East could be disrupted.

Rising oil prices could threaten to push up inflation in the UK. Energy costs coming down has been one of the biggest contributors to overall inflation falling from the peaks hit during the cost-of-living crisis.

Read more

2025-06-18T06:44:48Z