The UK is having its lowest Inflation rate since August 2016 as the economic dropout of the first month of the lockdown hit prices.
The Office for National Statistics (ONS) said the (CPI) Consumer Prices Index drop to 0.8% from 1.5% in March.
Decreasing petrol and diesel prices, lower energy bills, were the main reasons pushing inflation lower.
The ONS mentioned the prices of games and toys increased and the reason may be people spending more time at home.
However, due to unavailability, there were total 92 items in the ONS’s list of goods and services that it could not measure in April. These ranged from lemonade, haircut prices, cinema popcorn, manicures, and leisure activities involving sport.
The ONS said it would observe the matter for any distortion in the overall picture. “While the coronavirus limited the availability of some goods and services, its effect on prices was more muted,” said Jonathan Athow, deputy national statistician for economic statistics at the ONS.
He added that food prices generally hiked no more quickly than other goods and services, “though fresh vegetables did see stronger rises.”
Personal finance analyst at investment platform AJ Bell, Laura Suter said, “it was likely that as shops start re-opening retailers would deeply discount prices, putting further downward pressure on inflation.” She also briefed to positive news for savers while she added “For the first time in ages [savers] can now get above inflation interest rates on easy-access savings accounts – from more than one account.”
Most economists had anticipated April’s inflation to drop to 0.9%, and have predicted the rate will fall further since economic fallout of the pandemic continues.
Chief UK economist at Pantheon Macroeconomics, Samuel Tombs said inflation had taken a “big leap towards zero by the summer” as he elaborated retailers were planning “further large price cuts”.
“Inflation would recover next year but was likely to remain below 2% for much of 2021,” he said.
He added “The inflation outlook, then, supports the [Bank of England’s] Monetary Policy Committee doing more to stimulate the economy at its next meeting in mid-June – we look for a further £100bn of quantitative easing to be announced”.
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