UK inflation rate at fresh four-year low as fuel prices slump - CILT(UK)
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UK inflation rate at fresh four-year low as fuel prices slump

23 June 2020/Categories: CILT, Industry News, Freight Forwarding, Logistics & Supply Chain

A record fall in fuel prices, including petrol, pushed the UK's inflation rate down to 0.5% in May, the second full month of the coronavirus lockdown.

Fuel prices declined by 16.7% during the month, the Office for National Statistics (ONS) said, dragging the Consumer Prices Index (CPI) to the lowest level since June 2016.

Supermarkets were among the few shops allowed to open in May and food prices rose, the ONS said.

May's inflation rate was down from 0.8% in April, the first full month of the pandemic lockdown.

Clothing and footwear prices fell 3.1% amid heavy discounting.

"The growth in consumer prices again slowed to the lowest annual rate in four years," said ONS deputy national statistician for economic statistics Jonathan Athow.

The ONS admitted that it had difficulty compiling inflation statistics for May, since many areas of the economy were completely shut down.

Separate figures issued by the ONS on Tuesday showed that in the three months to April, workers' regular pay, excluding bonuses, grew at an annual rate of 1.7%, the weakest since January 2015.

However, when measured against the comparable three-monthly inflation rate, that means pay growth is continuing to outstrip inflation.

CPI remains below the Bank of England's 2% target for inflation.

Inflation is one of the main factors that the Bank of England's Monetary Policy Committee (MPC) considers when setting the "base rate". That influences what interest rates banks can charge people to borrow money, or what they pay on their savings.

Interest rates are currently at 0.1%, the lowest level in the Bank's 325-year history.

"May's further fall in inflation is probably only the beginnings of a prolonged period of very soft price pressure," said Paul Dales, chief UK economist at Capital Economics.

He added that MPC members were expected to opt for more stimulus measures to boost the economy at their policy meeting on Thursday.

source: BBC News


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