Inflation in the UK eased slightly to 3.4% last month as a steep fall in air fares and petrol prices was offset by a jump in the cost of food.May’s decline in the consumer prices index (CPI), down from the official figure of 3.5% for April, complicates the Bank of England’s interest rates decision on Thursday, although policymakers are still almost certain to hold interest rates at 4.25%.

Annual food inflation jumped to 4.4% in May from 3.4% in April, spurred by increases in the cost of sugar, jam and chocolate, which rose at the fastest pace since records began in 2016.Poor harvests affecting major cocoa-producers in Ghana and Ivory Coast sent chocolate prices soaring 17.7%.

Ruth Gregory, the deputy chief UK economist at Capital Economics, said rising food prices would be a concern to the Bank, especially when some staples such as meat were also pushed higher,“The third consecutive rise in food price inflation to 4,4%, its highest since February 2024, will be a bit of a blow for the Bank as it perhaps provides a tentative sign that firms are passing on more of April’s rise in national insurance contributions in their selling prices,”As well as food getting more expensive, furniture and household items also went up, increasing the rate of inflation for goods in shops from 1,7% in April to 2% last month, despite the cost of clothing and footwear declining by 0.

3% over the past year.The Office for National Statistics said its measure of core inflation, which excludes volatile items such as energy, food and alcohol, rose by 3.5% in the last year, down from 3.8%.City economists had correctly predicted last month’s fall in CPI to 3.

4%, which was largely owing to falls in the price of petrol and diesel, which brought down transport costs.The Bank’s target for the measure is 2% and May’s reading is likely to leave policymakers circumspect about accelerating the pace of interest rate cuts.The ONS said earlier this month that it had overestimated its CPI reading for April by about 0.1 percentage points because of an error that meant the effect of higher car tax bills was exaggerated.It left the original reading in place as the official figure for that month, but said it would use the correctly weighted data in future calculations.

Air fares tumbled in May from an increase of 16.2% in April to -3.9% in May, although this was largely because Easter – when airlines traditionally raise fares – fell a month later this year, in April rather than March.Services inflation, which has remained high over recent years, began to slow more rapidly, down from 5.4% to 4.

7%.The Bank has resisted making steep cuts to interest rates while services inflation has remained sticky.Pressure has increased on the central bank to cut the cost of borrowing, after recent data showed the economy has slowed.Wages growth fell and unemployment increased in the February-to-April quarter, while the economy shrank in April.Monica George Michail, an associate economist at the National Institute of Economic and Social Research, said inflation was likely to remain above 3% for the rest of the year amid persistent wage growth and the inflationary effects from higher government spending.

Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotion“Additionally, the current tensions in the Middle East are causing greater economic uncertainty.We therefore expect the Bank of England to keep rates on hold this Thursday and implement just one further cut this year,” she said.The chancellor, Rachel Reeves, said there was “more to do” to bring down inflation and support households hit by the high cost of living.She is keen for the Bank to accelerate the pace of interest rate cuts to ease monthly mortgage costs and reduce the cost of borrowing for businesses.Financial markets still expect two rate cuts to 3.

75% by the end of this year and several more next year as inflation is expected to drift back to 2%, although the Bank has been reticent to indicate where interest rates may settle.Reeves said: “We took the necessary choices to stabilise the public finances and get inflation under control after the double-digit increases we saw under the previous government, but we know there’s more to do.“Last week we extended the £3 bus fare cap, funded free school meals for over half a million more children and are delivering our plans for free breakfast clubs for every child in the country.”The shadow chancellor, Mel Stride, blamed Labour for inflation remaining above the Bank’s target.“Labour’s choices to tax jobs and ramp up borrowing are killing growth and stoking inflation, making everyday essentials more expensive,” he said.