Consumer price inflation was 2.8% in the 12 months to May 2026. That matched April's rate and came in below many economists' 3.0% forecast. The Office for National Statistics said slower food price growth largely offset stronger rises in transport costs. Core inflation edged higher and services inflation accelerated, figures that feed into the Bank of England's rate decisions and determine the real returns on cash savings. For savers the arithmetic is uncomfortable: many easy-access accounts still pay well below inflation, and one market analysis estimated nearly £70 billion of deposits earn 1% AER or less.

2.8% is the single figure that will matter to many households this month. The Office for National Statistics reported the headline CPI for May at that level, unchanged from April, a result slightly cooler than several forecasts that had pointed to a 3.0% print. The steady reading helps explain why the Bank of England's Monetary Policy Committee had room to think about leaving Bank Rate where it is, even as other parts of the economy show persistent price pressure.

Where the numbers came from

The ONS said food price growth eased in May, which lowered the contribution from grocery items to the headline rate. That slowdown was counterbalanced by a sharp rise in transport costs, driven by higher petrol prices and pricier airfares. Stripping out volatile items, core CPI rose slightly from the previous month, while services inflation, which tends to reflect labour and household-facing costs, accelerated.

These breakdowns matter because the Bank of England judges policy against a 2% inflation target. The ONS monthly CPI release is the primary input into the Monetary Policy Committee's deliberations, and the mix in May created a familiar policy trade-off: an easing from food that reduces headline pressure, yet continued strength in services and transport that keeps upside risks on the table.

For people keeping cash in current and easy-access accounts the picture is blunt. Money-management commentary has highlighted that many popular high-street products still pay rates well below inflation, so the real value of those balances is falling. One savings-market analysis estimated nearly £70 billion of UK deposits are earning 1% AER or less, a single-source figure that underlines how large a slice of household cash is exposed to negative real returns.

At the same time, that same market analysis pointed out there are higher-paying challenger bank and online accounts advertising materially better easy-access rates than the biggest retail banks. The gap in headline rates runs to a few percentage points, which makes switching accounts worthwhile for many savers, provided they're comfortable with the terms, notice periods and any limits on withdrawals.

Mortgage markets feel the same inflation picture in two ways. First, the persistence of services inflation and the rise in transport costs mean the risk of future monetary tightening isn't off the table. That risk lifts swap rates and the cost of longer fixed-rate mortgage funding, and lenders price that risk into the fixed deals offered to borrowers. Second, the headline hold at 2.8% reduces the immediate urgency for the Bank to raise rates further, a factor that has recently eased pressure on fixed-rate mortgage pricing compared with the heavy upward moves seen over the past two years.

In practice, that combination produces a mixed outcome: borrowers looking for new fixed deals may find pricing slightly calmer, while savers still struggle to find products that preserve capital in real terms. For many households the decision will come down to whether they prioritise access and certainty or a higher headline return that may be tied to online platforms or challenger banks.

Analysts and several commentators framed the May CPI outturn as strengthening the case for the Bank to leave Bank Rate unchanged at its recent level. The logic is straightforward: the easing from food helps offset services and transport, limiting immediate pressure to hike. But the ONS numbers also remind policymakers that underlying services inflation remains elevated, so any decision will weigh both headline and core dynamics.

Practical steps for savers include comparing easy-access rates across providers, checking notice and withdrawal terms, and considering whether moving a portion of deposits to higher-yielding accounts is appropriate. For those with mortgages, it means watching fixed-rate pricing and swap markets, since future changes in those markets will influence the cost of borrowing.

All of this flowed from the ONS monthly CPI release for May, and the Bank's committee met shortly after those numbers were published to consider interest rates.

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The Monetary Policy Committee met shortly after the ONS May CPI release to consider interest rates, with the 2.8% headline and elevated services inflation central to its deliberations. Originally reported by BBC.

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