UK inflation hits four-year low on virus lockdown

LONDON (AFP) – Britain’s annual inflation rate slid to 0.5 per cent in May, the lowest level in four years, as the country’s coronavirus lockdown dampens prices, official data showed yesterday.

Analysts said the data, along with recent figures showing a surge in United Kingdom (UK) unemployment and a massive contraction in the country’s economic output, meant the Bank of England was certain to pump billions more pounds into the economy under so-called quantitative easing (QE).

The Consumer Prices Index (CPI) annual inflation rate slumped to 0.5 per cent last month from 0.8 per cent in April, the Office for National Statistics (ONS) said in a statement yesterday.

The CPI rate stood at 1.5 per cent in March and at 2.0 per cent in May 2019 and the last time it had stood at 0.5 per cent was in June 2016. Inflation continued to slide last month despite a rebound in oil prices. “Global prices for crude oil fell sharply from the beginning of 2020 before recovering throughout May, albeit to levels well below the start of the year,” the ONS noted.

“Within the UK, those rises were not seen at the (petrol) pumps as the coronavirus lockdown continued.”

Another factor behind the slowdown in inflation was a cut in retail prices for recreational items.

“The cost of games and toys fell back from last month’s rises while there was a continued drop in prices at the pump in May, following the huge crude price falls seen in recent months,” said ONS statistician Jonathan Athow.

A man wearing a protective face mask walks past a closed shop in Portobello Market in west London. PHOTO: AFP