The UK economy grew by 0.5% during the month, the Office for National Statistics (ONS) said, higher than the flat growth most economists expected. Every area of the economy expanded including construction, travel and manufacturing.
However, businesses reported that higher running costs had led to them to put up prices for customers. With household disposable incomes set to fall further in the autumn when energy prices are set to rise again, there is "still a real risk" that the economy could fall into a recession, said Paul Dales, chief UK economist at Capital Economics.
Both businesses and households are being hit by rising prices, which are surging at their fastest rate for 40 years due to record-high fuel and energy costs. The inflation rate at which prices rise, hit 9.1% in May, and is expected to reach 11% later this year.
The rise in the cost of living has led to unions calling for pay rises to help workers cope. Several industries, such as the railways, have seen workers strike over pay. But the government has warned against employers handing out big increases in salaries over fears of a 1970s-style "inflationary spiral", where firms hike wages and then pass the cost on to customers via higher prices.
The UK's statistics body also cited price increases for metals, some foods, including fish, and other staples.
Although sales were now matching those seen in 2019, before the pandemic struck, it said staff costs were far higher than pre-Covid, as firms across the sector had to hike wages to overcome staff shortages.
The British economy returned to solid growth in May, up by 0.5%, defying fears of a month of stagnation. The services sector drove half the growth, in particular health services, including GP appointments. Monthly figures are volatile, but thanks to some upward earlier revisions, growth over the three months to May was 0.4%. However, consumers showed signs of being squeezed by the cost of living - with wholesale and retail dragging down the economy in May.
