2Q 2026 UK Economy Overview As oil prices finished the second quarter roughly US$3 above the level seen for a barrel of oil in the days leading up to the 27 February conflict escalation in the Middle East, inflation in the UK, too, fell as the quarter closed. Headline CPI rose to 3.3% in March, driven by higher fuel and energy costs, before easing to 2.8% in both April and May as lower regulated electricity prices and softer services inflation more than offset continued strength in energy inflation. In its April Monetary Policy Report (MPR), the Bank of England (BoE) had expected inflation to reach 3.0% and 3.3% in April and May, respectively. Core inflation also moderated, falling from 3.1% to 2.6% over the quarter, while services inflation declined from 4.5% to 3.7%, suggesting limited evidence of significant second-round effects thus far.
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