Consumer Price Inflation – May 2025 (ONS Overview)

At the end of last month the ONS (Office For National Statistics) reported that inflation Consumer Prices Index (CPI) slowed from 3.5% to 3.4% year-on-year, with a modest 0.2% monthly rise.

(CPIH), which includes owner-occupiers’ housing costs, slowed to 4.0% in the year to May - down slightly from 4.1% in April. On a monthly basis, it rose by 0.2%

What’s Driving These Changes?

• Transport costs fell sharply month-on-month, mainly due to decreases in airfares and fuel - largely influenced by Easter’s timing - and a correction to a prior vehicle tax data error

• Food and non-alcoholic beverages saw strong upward pressure, with prices rising 4.4% annually - the highest since early 2024

• Furniture and household goods also contributed to inflation, with an 0.8% annual increase - the quickest pace since December 2023

Core Inflation Trends

• Core CPI (CPI excluding energy, food, alcohol and tobacco) rose by 3.5% in the 12 months to May 2025, down from 3.8% in the 12 months to April.

• CPI inflation for goods rose modestly from 1.7% to 2.0%, while the CPI services inflation annual rate slowed from 5.4% to 4.7%.

Inflation in May remains elevated but shows signs of easing. Lower transport and housing cost growth are helping to moderate the rate, although food and household goods continue to exert upward pressure. Core inflation is trending slightly down, suggesting a gradual cooling.

With inflation beginning to moderate, the ONS release suggests a cautiously optimistic outlook.

Source: ONS