Business Briefing: UK inflation holds at 3.4% amid rising food prices and cheaper transport costs

UK inflation came in higher than expected in May, holding at 3.4 per cent despite forecasts of a drop. The ONS says rising food prices offset cheaper air fares and transport costs. An error in April’s data means last month’s figure should also have been 3.4 per cent. Economists had hoped for a bigger fall after April’s spike in household bills.

Economy growing more slowly than expected: More Business in Brief

• The UK economy is now forecast to grow more slowly than expected, according to the CBI. US tariffs and rising costs are hitting investment, dragging growth predictions down to 1.2 per cent for 2025. That’s a sharp drop from the earlier 1.6 per cent forecast, with next year now cut to just one per cent. The CBI says early-year momentum is fading as business pressures mount.

• Two major regional investors are merging to form PXN Group, a £670 million venture capital giant. Praetura Ventures and Par Equity will combine forces to boost funding outside London and the South East. The new firm will be the fastest-growing investment group of its kind beyond the capital. The merger is subject to approval from the Financial Conduct Authority.

• AO World has posted stronger-than-expected results, with profits up 32 per cent to £45 million. Revenue rose to £1.1 billion, boosted by its membership scheme and the Music Magpie acquisition. Business-to-consumer sales jumped 12 per cent as the firm expanded its product range. The electricals retailer says growth was driven by customer loyalty and new offerings.

• Despite headlines suggesting a return to the office, most employers haven’t cut back on flexible working. New research shows hybrid arrangements remain common, especially in the public and not-for-profit sectors. Just two per cent of eligible staff choose to work fully on site. Researchers found no clear link between hybrid working and employee pay.