When the Iran conflict erupted, rising inflation was the key headline economic risk, with global supply chains in the firing line.
May’s data brings some cautious relief: the 12-month Consumer Price Index (CPI) rate held at 2.8%. Some inflationary impacts remain delayed: for instance the energy price cap will change at the beginning of July and affect inflation.
Forecasts point to inflation of 3.7% by year-end. Certainly elevated, but nothing like the peaks of recent years, provided the peace deal holds and the Strait of Hormuz re-opens fully. Source: Dataloft by PriceHubble, ONS, HM Treasury Consensus Forecasts