What happened
UK consumer price inflation stayed at 2.8 percent in the year to May, unchanged from April and still above the Bank of England target of 2 percent. Independent forecasters surveyed by the Treasury expect it to rise to around 3.5 percent in the final months of the year.
Why it matters
Inflation measures how quickly the cost of everyday goods and services is climbing. A move back toward 3.5 percent would erode the value of wages and savings faster, and it makes it harder for the Bank of England to cut interest rates.
Explained simply
Imagine your weekly shop is a bucket you fill with the same items every week. Inflation is how much more you have to pour in to fill the same bucket. Right now you are pouring in about 3 percent more than a year ago, and forecasters think you will soon be pouring in even more.
What it means for you
If inflation climbs as expected, the Bank of England is less likely to cut rates soon, so mortgage costs may stay elevated. It is worth checking that your savings account beats inflation, and considering whether a fixed rate ISA or cash bond locks in a better return before prices accelerate.
