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Inflation falls to lowest level since 2016

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20/05/2020
The UK inflation rate fell to a near four-year low in April as Britain entered lockdown, data shows.

The Consumer Prices Index (CPI) fell to 0.8% from 1.5% in March, its lowest level since August 2016, according to the Office for National Statistics (ONS).

Collapsing energy and fuel prices were the main contributors to the falling inflation rate.

Transport and clothing costs also pushed inflation down as travel restrictions were put in place and retailers offered discounts to encourage people to spend online.

In contrast, the cost of toys, alcohol and knitting wool rose during the first full month of lockdown.

Jonathan Athow, deputy national statistician at the ONS, said: “While the coronavirus limited the availability of some goods and services, its effect on prices was more muted. Falling petrol and diesel prices, combined with changes to the domestic energy price cap were the main reasons for lower inflation in April.

“Games, toys and hobbies saw rising prices, perhaps as people occupied their time at home. Food prices grew no more quickly than other goods and services, though fresh vegetables did see stronger rises.”

Economists had widely predicted inflation to fall to 0.9% in April, so the sharp drop was not totally unexpected.

Laura Suter, personal finance analyst at investment platform AJ Bell, noted the news was a boost to savers, who “for the first time in ages” can now get above inflation interest rates on easy-access savings accounts – from more than one account.

 

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