May’s Inflation Numbers & the Surprise Oil Shake‑Ups
When the banks threw the numbers out in May, everyone was looking for that sweet spot of “just a bit higher, but still manageable.” Instead, inflation slipped to 3.4% on an annualised basis – a tiny tick down from April’s 3.5%. Yet the core numbers tell a slightly different story.
Core Inflation: The Sneaky Core 3.5%
Core inflation – which strips out foods and energy bills – settled at 3.5% over the past twelve months. That’s a slight dip from April’s 3.8% and, surprisingly, comes in under the forecast. But don’t get too comfortable.
Food & Drink: The Price‑Tag Tango
- Food & Drink Costs jumped from 3.4% in April to a whopping 4.4% in May. That alone pushed the overall inflation upward, keeping the UK’s price level higher than most of Europe.
- Nick Hyett, Investment Manager at Wealth Club, called it “unwelcome but not unexpected.” He warned that hopes for a gradual slowdown in price rises – especially once big welfare and tax changes settle down – were being undercut by other forces.
Middle‑East Tension: The Global Fuel Game Changer
The price of Brent crude, the benchmark for global oil, spiked sharply, even though major shipping lanes are still kicking around. A looming conflict could disrupt energy flows more seriously than we’ve seen so far. A sudden jump in oil costs is a nasty catalyst for inflation across the board.
With that risk on the table, the Bank of England might rethink its rate‑cut agenda. A hotter oil price could push rates higher, or at least make any cuts feel a bit less likely.
Final Thoughts: No One Is an Island
We often say that no man is an island. With inflation, it turns out no country is either – even if it’s surrounded by water!
