UK CPI: No Country is an Island

Strategic Insights -

UK inflation rose to 3.4% in May, down slightly from the 3.5% reported in April. The annualised inflation rate, which takes into account price increases over a 12-month period, decreased to 3.5% in the 12 months to May, down from 3.8% in April. The core inflation rate, which excludes volatile food and energy prices, remained unchanged at 2.3%. The slight decrease in inflation is attributed to the easing of price increases in non-food items, while food and drink prices continued to rise, increasing from 3.4% in April to 4.4% in May. The escalation of the conflict in the Middle East has led to a sharp increase in oil prices, posing a significant inflationary risk. This, combined with already rising prices, could alter the calculus for the Bank of England and make rate cuts less likely.

Key Takeaways:

  • The UK annualised inflation rate decreased to 3.4% in May, down from 3.5% in April.
  • The core inflation rate remained unchanged at 2.3%.
  • Food and drink prices continued to rise, increasing from 3.4% in April to 4.4% in May.
  • The conflict in the Middle East has led to a sharp increase in oil prices, posing a significant inflationary risk.
  • The inflationary risk combined with already rising prices could make rate cuts less likely.
  • Nicholas Hyett, Investment Manager at Wealth Club, stated that the UK inflation remains high and is unwelcome, but not unexpected.
  • The conflict in the Middle East has the potential to disrupt global energy flows, driving up prices across the board.
  • Wealth Club, a UK-based investment service, has seen over 65,000 members and circa 13,000 investors investing more than £1.5 billion through them.

Statistics:

  • The UK annualised inflation rate decreased to 3.4% in May (M2 PressWIRE, June 18, 2025).
  • The core inflation rate remained unchanged at 2.3% (M2 PressWIRE, June 18, 2025).
  • Food and drink prices increased from 3.4% in April to 4.4% in May (Nicholas Hyett, Investment Manager, Wealth Club).
  • Brent crude oil prices have moved sharply higher, driven by the conflict in the Middle East.
  • The conflict in the Middle East has the potential to disrupt global energy flows.
  • Wealth Club has over 65,000 members (M2 PressWIRE, June 18, 2025).
  • Circa 13,000 investors have invested more than £1.5 billion through Wealth Club (M2 PressWIRE, June 18, 2025).

Sources:

  • M2 PressWIRE (June 18, 2025) - UK CPI: No country is an island
  • Nicholas Hyett, Investment Manager, Wealth Club (June 18, 2025)