UK Inflation Drops to Lowest Level in Four Years
A global slump in oil prices saw the UK inflation rate fall dramatically from 1.5% in March to 0.8% in April.
The UK’s inflation rate fell to its lowest level in almost four years as of last month, according to information released today by the Office for National Statistics (ONS).
As lockdown measures came into effect across the country, demand for fuel and energy decreased dramatically, reacting with a global oil surplus to drive crude oil prices down to historic lows. Clothing retailers also slashed prices in a bid to lure customers online.
These factors weighed on the Consumer Price Index, driving inflation lower. While there was also an increase in expenditure on leisure-related products, it failed to make up the difference in consumer spending.
As a result, the roll-out of the UK’s nationwide lockdown measures between March and April coincided with the inflation rate’s fall from 1.5% to 0.8%
In its release, ONS stated: “Since November 2018, the largest upward contribution to the CPI inflation rate has come from housing and household services. However, reductions to household utility prices in April 2020 saw the group’s contribution to the headline rate fall to 0.16 percentage points, from 0.51 percentage points in March 2020.”
“This is the lowest contribution the group has made to the headline CPI rate since November 2010,” it continued.
Should inflation rates continue to fall in the UK and elsewhere, price deflation may begin to occur, which would impede efforts to revive the world economy as the COVID-19 pandemic abates.