Economy

UK inflation hits four-year low

The UK’s inflation rate dropped to 0.5% in May, down from 0.8% in April, according to new figures from the Office for National Statistics (ONS).

According to the ONS, falling prices for motor fuels and a variety of recreational and cultural goods resulted in the largest downward contributions to inflation rates between April and May 2020.

There was also a downward contribution of 0.08 percentage points from recreation and culture, where prices overall fell by 0.1% between April and May 2020, compared with a rise of 0.5% between the same two months a year ago

For restaurants and hotels, there was a smaller downward contribution, where prices overall were estimated to have increased by 0.4% between April and May this year, compared with a larger increase of 0.8% between the same two months a year ago.

Part of this contribution (0.01 percentage points) came from those items available to consumers this month for fast food and takeaway service. Despite this, rising prices for food and non-alcoholic drinks resulted in a partially offsetting upward contribution to change.

Earlier this month new data from the British Retail Consortium (BRC) revealed that May shop prices had tumbled at the fastest rate of decline since 2006, falling by 2.4% against a 1.7% decrease in April.

This was “largely” driven by a sharp fall in non-food prices, which fell “sharply” by 4.6% in the period, compared to a decline of 3.6% the month prior. This again marked the highest rate of decline in 14 years.

Helen Dickinson OBE, CEO of British Retail Consortium, said at the time: “We expect to see continued upward pressure on food prices from the effects of the pandemic in the coming months, while non-food prices are likely to remain deflationary with subdued sales.

“Even as non-essential shops begin to reopen from 15 June, consumer demand is expected to remain weak and many retailers will have to fight to survive, especially with the added costs of social distancing measures.”

Back to top button

Please disable your ad-blocker to continue

Ads are the primary way in which publishers generate the revenue needed to pay their staff. If we can't serve ads, we can't pay journalists to write the news.