Price inflation slowed down in April to below 1%, as we start to experience the economic ramifications of the Covid-19 crisis.
According to the latest official figures, the Consumer Prices Index (CPI) measure of price inflation stood at 0.8% in the year to April.
CPI inflation fell from 1.5% in the year to March.
Standing at 0.8%, inflation is now at its lowest rate since August 2016.
The Bank of England’s target for CPI inflation remains at 2%.
Another measure of price inflation, known as ‘core inflation’, held steady at an annual rate of 1.5%. This core inflation measurement excludes more volatile prices for items including energy, food and alcohol.
The Office for National Statistics (ONS) explained that the sharp fall in CPI price inflation was the result of lower petrol and diesel prices, and cheaper energy bills.
Average petrol prices fell by 10.4p a litre between March and April.
It’s the most significant monthly fall in prices at the pump since official records began in 1990.
For domestic energy prices, a statutory reduction in the default tariff cap helped to drag inflation lower.
Some prices rose between March and April, including the cost of games and toys. With most of the country in lockdown, it’s reasonable to think that board games are increasingly popular as a way to pass the time!
Jonathan Athow, deputy national statistician for economic statistics at the ONS, said:
"While the coronavirus limited the availability of some goods and services, its effect on prices was more muted."
The ONS reported that food prices generally rose in price no more than the average rise for other goods and services, but the cost of fresh vegetables rose a little faster.
The fall in inflation last month was widely expected by economists, who forecast a fall to 0.9%.
It’s reasonable to expect price inflation to fall further in the short-term, due to the economic consequences of the pandemic.
One expectation for the coming months is for reopening shops to heavily discount their stock, which would place further downwards pressure on the price inflation figures.