The consumer prices index (CPI) has remained at 8.7% In the 12 months until May 2023, the latest inflation figures from the Office for National Statistics (ONS) have shown, with the industry describing the lack of movement as “stubbornly sticky”.

There has been no movement from the CPI figures published for April, which also were listed at 8.7%.

Although CPI remained steady, core inflation rose from 6.8% in April to 7.1%, the highest rate it has been in since March 1992. This figure does not include inflation rates on food and energy prices, as these tend to be highly volatile.

Furthermore, service sector inflation rose to 7.4%, from 6.9% in April.

However, food inflation dropped to 18.3%, with food stuffs including milk, cheese and eggs seeing the largest downward contribution, with annual rates falling from 29.3% in April to 27.4% in May. The only food class to show a rise in the annual rate was fish, which saw an increase of 14.2% in April to 16.6% in May.

AJ Bell’s head of financial analysis, Danni Hewson, said: “Markets had been erring on the side of caution when it came to pricing in how quickly UK inflation is falling, but the news that there’s been no change in the headline CPI rate will send something of shiver through even the hardiest spectator.

“Inflation had been expected to fall – at least a bit – but it hasn’t obliged, remaining stubbornly sticky and cementing the prospect of a rate rise tomorrow as well as raising expectation that the hike will be higher than had been previously anticipated.

“There is a tiny bit of good news hidden in this troubling update from the ONS and that’s the rate at which food prices are rising, which has slowed, but it will be little comfort to all those facing huge increases in their monthly mortgage payments.

“Savings cushions have been eroded over the past year and there will be many households facing the real prospect of being unable to keep paying for the roof over their heads.

“And these inflation numbers show the Bank of England (BoE) still has a big job to do if they’re to root out the inflation which seems to have become embedded in the very fabric of our economic lives.”

With inflation not falling, the BoE is expected to raise interest rates on Thursday to combat any further rises, with many expecting interest rates to rise to 6%. This will impact mortgage rates and will ultimately result in a further tightening of the budget for many homeowners in the UK.

In relation to the effects of the CPI results on mortgages, head of personal finance at Hargreaves Lansdown, Sarah Coles, said: “For anyone with a variable mortgage, the likelihood of another rate rise tomorrow means yet more pain. Plenty of those who moved onto a variable deal when their fixed rate expired had expected rates to have started to ease by now, so there’s a growing risk of rises that people hadn’t expected and cannot afford.

“For anyone looking for a fixed rate, the picture is even bleaker. It has already been a torrid few weeks, as mortgage rates have shot up. The market is pricing in several hikes over the coming months. Just ahead of the announcement, it was expecting rates to peak at 5.81% in February, and only start to fall gradually from there.

“This has pushed the average two-year fixed rate mortgage over 6%. Higher core inflation is likely to reinforce the market’s conviction that rates will need to go significantly higher, and could power even higher rate expectations further down the line. Even the concern that rates could rise would bring more mortgage misery for anyone looking for a new deal or facing a remortgage.”

Personal finance analyst at BestInvest, Alice Haine, added: “The fear is that more rate rises could push some households to breaking point when their fixed-rate mortgages mature, and they must absorb significantly higher repayments. With mortgage costs increasingly taking up a larger share of consumers’ take-home pay, this could have dire consequences for the economy as people restrict their spending to ensure they can meet their household bills.

“Britain may no longer be expected to be the poorest performer against its global peers in the G7, after the International Monetary Fund sharply upgraded its growth forecast, but it is still on track to have the highest inflation rate in the developed world, something exacerbated by strong wage growth as employees demand bumper pay rises to help keep pace with rising prices.”

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