UK consumers warned of ‘the calm before the storm’
Key Points
- UK consumers have been warned of significant price increases in the coming months.
- Inflation held steady at 2.8% in May 2026, which was a welcome surprise for many, but the CBI has warned this is the calm before the storm.
- With energy bills set to go up from June, this will trickle through to consumer prices as well as directly affecting household spending.
- Even with a deal between the US and Iran to open the Straits of Hormuz, there is still a significant impact on global energy prices as a result of the conflict.
The latest data shows consumer price inflation holding steady at 2.8%, but consumers have been warned of price increases in the coming months.
Consumer price inflation data published by the Office for National Statistics (ONS) on Wednesday 17 June shows that on a monthly basis, the Consumer Prices Index (CPI) rose by 0.2% in May 2026, the same rate as in May 2025.
Year-on-year, the CPI has remained the same at 2.8%, with the main drivers being transport inflation, which includes the price of motor fuel. The May annual rate for transport inflation was 6.8%, the highest rate recorded since December 2022.
Air fare rose by 10.3% between April and May 2026, which may have been associated with the Easter school holidays as well as the effect of the conflict in the Middle East.
The effect of the Iran crisis is most apparent in the price of petrol, with the average price at 157.4 pence per litre in May 2026 – the highest price recorded since November 2022.
While some consumer prices rose notably higher than the average, the picture on inflation in May is relatively stable and could come as a relief to many.
The calm before the storm
However, the Confederation of British Industry (CBI) has warned that bigger rises are expected in the coming months, especially when accounting for rising energy costs. The CBI represents
“Inflation was widely expected to pick up in May, so the latest data comes as a welcome surprise,” said CBI Deputy Chief Economist Alpesh Paleja.
“But this is likely to be the calm before the storm, with price pressures set to see a pronounced rise over the coming months.”
Paleja added that the contribution to inflation from higher energy costs will increase with bills set to rise from June, and this will also impact other parts of the inflation basket.
“That remains true despite the deal between the US and Iran to extend the ceasefire and reopen the Strait of Hormuz. Details of the agreement have yet to be finalised, and energy flows are unlikely to resume immediately, meaning it does little to alter the near-term outlook.”
“However, the deal does reduce the risk of the more severe inflation scenarios that had been feared if the conflict escalated further or energy infrastructure suffered additional damage,” Paleja said.
“While households are still likely to face a prolonged squeeze on living standards, the outlook is now less challenging than it appeared only a few weeks ago.”
