Commenting on the latest ONS data that shows inflation to have held at 2.8 per cent in May, Kevin Brown, savings expert at financial mutual Scottish Friendly, says:
“The data suggests the recent energy shock hasn’t fed through as forcefully as feared (1), giving the Bank of England more room to look through immediate inflationary pressure from the Iran conflict.
“At tomorrow’s meeting, the Bank will likely still need to tread carefully. The economy contracted in April (2), hiring intentions remain weak and households are highly price sensitive (3), so raising rates could add pressure while lacking the power to lower global energy prices.
“Hopefully easing pressures in the Middle East should dampen inflation concerns (4) and give policymakers more time to assess whether this is a short-term shock. That points to a hold, while an unchanged reading makes it harder to argue for an immediate rate rise.
“For households, this is encouraging, but inflation doesn’t need to be rising for the cost-of-living squeeze to remain painful. The practical response for many will be to review savings rates, energy tariffs, mortgage costs and everyday spending, while considering whether longer-term money could work harder through investing.”
(1) Source: https://global.morningstar.com/en-gb/economy/what-expect-mays-uk-inflation-numbers
(2) Source: https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/gdpmonthlyestimateuk/april2026
(4) Source: https://news.sky.com/story/iran-war-latest-trump-deal-tehran-pakistan-strait-hormuz-blockade-13509565