UK Inflation Holds Steady as Chocolate Prices See Record Surge

The United Kingdom’s annual inflation rate held firm at 3.4% in May, remaining at its highest level in over a year, according to data released by the Office for National Statistics (ONS) on Wednesday.

While overall inflation remained unchanged, food prices—especially chocolate—saw notable increases, adding to concerns about persistent cost pressures on consumers.

Chocolate prices surged 17.7% compared to a year ago, marking the steepest increase since the ONS began tracking such data in 2016. The rise has been attributed to poor weather conditions and long-term supply chain issues in major cocoa-producing countries like Ghana and Ivory Coast, which collectively produce more than half of the world’s cocoa. Experts also point to disease outbreaks and structural issues within those countries’ agricultural sectors as key contributing factors.

The broader category of food inflation also rose, climbing to 4.4% in May—its highest point since February 2023. Some economists believe this trend may partly reflect businesses passing on increased costs, including April’s rise in National Insurance contributions and the higher national minimum wage, both introduced in Chancellor Rachel Reeves’ recent budget.

“The data perhaps provides a tentative sign that firms are passing on more of April’s rise in National Insurance Contributions in their selling prices,” said Ruth Gregory, deputy chief economist at Capital Economics.

Despite the continued food inflation, the main consumer price index remained flat compared to April’s revised rate, offering mixed signals about the UK’s economic trajectory. Inflation continues to hover above the Bank of England’s 2% target, but economists do not expect the central bank to reduce interest rates from the current 4.25% when it concludes its latest meeting this week.

Some relief came from a decline in travel costs. Airfares, for example, dropped by 5% between April and May, partly due to the timing of Easter, which fell in March last year but landed in April this year. The seasonal shift helped offset some of the upward pressure from food and other categories.

Chancellor Reeves defended the government’s economic strategy, stating:

“This government is investing in Britain’s renewal to make working people better off.”

However, Shadow Chancellor Mel Stride criticized the inflation rate as “deeply worrying for families,” arguing that Labour’s fiscal policies are contributing to higher costs.

Retailers and small business owners have also raised concerns. Kris Hamer, director of insight at the British Retail Consortium, said that retailers had long warned of the potential for increased costs to be passed on to consumers. John Roberts, CEO of AO World, echoed that sentiment, noting that taxing businesses and employment “isn’t a growth engine.”

On the ground, business owners like Zayna Omer, who runs a coffee stand in Whitstable, report seeing changes in consumer behavior. While retirees continue to spend, younger families are becoming more price-conscious, comparing options before making purchases and bringing packed lunches on day trips.

Looking ahead, analysts warn that inflation could face new pressures from global events. Tensions in the Middle East, particularly between Israel and Iran, have already contributed to an 18% rise in oil prices this month. Disruptions to the Strait of Hormuz, a key global oil route, could push energy prices higher—potentially impacting inflation in the months ahead.

David Bharier, head of research at the British Chambers of Commerce, cautioned that many small businesses may struggle to absorb such cost increases, particularly if geopolitical volatility continues to influence global commodity prices.

While current inflation levels are far below the double-digit peaks seen in 2022, economists and households alike are wary of lingering price pressures. For many families, the cumulative impact of higher costs over the past four years—amounting to a 25% increase in overall prices—still defines their everyday financial experience.

With input from BBC and Sky News.