The UK’s inflation charge fell in April to its lowest since August 2016 because the financial fallout of the primary month of the lockdown hit costs.
The Shopper Costs Index (CPI) fell to 0.8% from 1.5% in March, the Workplace for Nationwide Statistics (ONS) mentioned.
Falling petrol and diesel costs, plus decrease vitality payments, have been the principle drivers pushing inflation decrease.
However the costs of video games and toys rose, which the ONS mentioned could also be as a consequence of folks spending extra time at residence.
Jonathan Athow, deputy nationwide statistician for financial statistics on the ONS, mentioned: “Whereas the coronavirus restricted the provision of some items and providers, its impact on costs was extra muted.”
He mentioned that meals costs typically rose no extra rapidly than different items and providers, “although recent greens did see stronger rises”.
The ONS mentioned common petrol costs dropped by 10.4p a litre between March and April – the most important fall since unleaded petrol data started in 1990 – amid a stoop in international oil costs.
Vitality costs additionally pushed inflation decrease as regulator Ofgem decreased its default tariff cap.
The ONS mentioned garments retailers, hit through the early days of the lockdown by weaker footfall after which the closure of shops, resorted to extra low cost gross sales than standard to attempt to shift their inventory.
Items seeing upward strain on costs included video video games and consoles, board video games and youngsters’s toys, the ONS mentioned. And the value of knitting wool rose, one other signal of the crafts and hobbies in style with folks staying at residence.
Lengthy-life merchandise – reminiscent of cook-in sauces and frozen fish – additionally noticed value hikes final month as shoppers stocked up for all times in lockdown.
Higher information for savers
Laura Suter, private finance analyst at funding platform AJ Bell, mentioned it was probably that as retailers begin re-opening retailers would deeply low cost costs, placing additional downward strain on inflation.
She additionally pointed to constructive information for savers. “For the primary time in ages [savers] can now get above inflation rates of interest on easy-access financial savings accounts – from multiple account.”
Most economists had anticipated inflation to fall to 0.9% final month, and have predicted the speed will fall additional because the financial fallout of the pandemic continues. CPI is now far under the Financial institution of England’s 2% goal.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, mentioned inflation had taken a “massive leap in direction of zero by the summer season” as he mentioned retailers have been planning “additional massive value cuts”.
He predicted inflation would recuperate subsequent 12 months however was prone to stay under 2% for a lot of 2021.
“The inflation outlook, then, helps the [Bank of England’s] Financial Coverage Committee doing extra to stimulate the economic system at its subsequent assembly in mid-June – we search for an extra £100bn of quantitative easing to be introduced,” he added.
Core inflation, which excludes vitality, meals, alcohol and tobacco, held broadly regular at an annual charge of 1.5%.
Inflation as measured by the Retail Costs Index (RPI) – an older measure of inflation which the ONS says is inaccurate, however is extensively utilized in bond markets and for different business contracts – dropped to 1.5% from 2.6%.