You are here: Home - Household Bills - News -

Second lockdown slows inflation to 0.3% crawl

0
Written by: Emma Lunn
16/12/2020
Covid-19 restrictions and the ‘Black Friday effect’ pushed the UK’s CPI inflation rate down to 0.3% from 0.7% in the previous month, according to the Office for National Statistics (ONS).

Clothing prices fell by 2.6% between October and November 2020, compared with a rise of 1% between the same two months a year ago.

The ONS pointed out that throughout 2020, it has seen clothing and footwear prices follow a different pattern compared with previous years.

It recorded increased discounting during March and April, probably in response to the lockdown, then prices were relatively stable (compared with previous years) to August.

Between August and October, prices broadly increased as usual, but this has been followed by a fall between October and November, whereas prices usually tend to rise between these two months.

This latest fall reflects increased discounting compared with last month.

The CPIH 12-month rate, which includes owner occupiers’ housing costs, also fell to 0.6% in November, down from 0.9% in October.

Ulas Akincilar, head of trading at the online trading platform Infinox, said: “England’s November lockdown slammed the brakes on the UK’s already faltering recovery and sent the economy skidding towards deflation.

“The prices of most of the goods and services tracked by the ONS fell during the month, and only the most rose-tinted observer could dismiss this as the result of temporary discounting for Black Friday.

“The pain is most acute among clothing and footwear retailers, who slashed prices by 2.6% overall between October and November. During the same period last year, average prices rose by 1%.

“Behind the desperate price cutting is an uncomfortable truth – consumer demand is reeling and business confidence is on the ropes.”

Rachel Winter, associate investment director at Killik & Co, said: “Unsurprisingly consumer spending and consumer confidence took a knock during the second national lockdown in November and inflation has further reduced. While vaccine hopes and flourishing retail sales over the last few weeks ahead of Christmas injected a glimmer of hope into a flatlining economy; Greater London and parts of the home counties being put into tier three restrictions, and the ensuing impact on the hospitality and leisure industries, will dampen back down any prospects of a recovery.

Unemployment has also shot up to the highest rate on record further rocking consumer confidence and they will continue to exercise caution when it comes to discretionary spend. All this will impact inflation figures, although a no-deal Brexit outcome, which is a real possibility, will weaken sterling and cause imported food price inflation, further hitting consumers.”

 

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Your right to a refund if travel is affected by train strikes

There have been a wave of train strikes in the past six months, and for anyone travelling today Friday 3 Febru...

Could you save money with a social broadband tariff?

Two-thirds of low-income households are unaware they could be saving on broadband, according to Uswitch.

How to help others and donate to food banks this winter

This winter is expected to be the most challenging yet for the food bank network as soaring costs push more pe...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week