UK inflation remained at 2.8% in May, defying expectations of a jump, as higher transport costs were offset by slower food price rises. The Office for National Statistics reported that motor fuel prices surged 25% year-on-year, but food inflation eased to its slowest rate since December 2024, with declines in meat, cheese, and vegetables.
The steady inflation figure comes despite earlier fears that the Middle East conflict would drive up costs. In March, after Iran choked oil supplies through the Strait of Hormuz, some investors expected up to three quarter-point interest rate rises by the end of the year. However, a series of better-than-forecast economic readings have raised hopes that the impact on living costs may be more muted than initially feared.
Brent crude oil has fallen below $80 a barrel, the lowest since early March, amid hopes that a US-Iran memorandum could lead to the reopening of the Strait of Hormuz. Experts caution that resuming global oil flows would be a slow process taking months.
In other economic news, Jaguar Land Rover has reversed plans to shift one of its factories to all-electric production, instead offering petrol and hybrid versions of new models. The company aims to boost US sales to match its current business size, targeting wealthy Americans as it focuses on growth in its biggest market.
Meanwhile, Elon Musk's SpaceX has overtaken Amazon as the world's fifth-most valuable company after its stock market debut. The milestone came as SpaceX agreed to acquire the AI coding startup Cursor for $60 billion, aiming to capitalise on the commercial success of AI-powered coding tools.
