Price rises hit 4-year low with key lockdown items actually getting cheaper

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UK inflation fell to its lowest level in four years last month after a record drop in fuel prices and as clothing and energy costs continued to tumble.

But petrol prices weren’t the only things dropping, with toys and games also getting cheaper in May.

The Office for National Statistics (ONS) said the rate of Consumer Price Index (CPI) inflation fell to 0.5% in May from 0.8% in April – the lowest since June 2016.

It comes as fuel prices tumbled by 16.7% in May – the biggest fall on record – while energy costs dropped 7% and clothing and footwear price tags fell 3.1% as retailers resorted to heavy discounts amid the lockdown.

Jonathan Athow, ONS deputy national statistician for economic statistics, said: “The growth in consumer prices again slowed to the lowest annual rate in four years.

“The cost of games and toys fell back from last month’s rises while there was a continued drop in prices at the pump in May, following the huge crude price falls seen in recent months.

“Outside these areas, we are seeing few significant changes to the prices in the shops.”

The latest inflation data showed that average petrol prices fell to 106.2p a litre last month, while diesel dropped to 113.4p a litre – levels not seen since 2016.

Fuel prices have been falling sharply as the global cost of oil has been hit hard amid the coronavirus crisis with lockdowns worldwide affecting demand, though crude prices began bouncing back last month.

There was also a downward contribution from “games, toys and hobbies”, with the effect coming from a variety of traditional toys and games as well as computer games consoles and computer games.

Inflation has also been driven lower in recent months by falling energy prices after regulator Ofgem reduced its default tariff cap.

In a sign of the impact of the UK’s Covid-19 lockdown, as clothing price tags fell again sharply amid heavy discounting, food and alcohol prices also saw steep rises – up 1.8% and 2.6% respectively.

Economist James Smith, at ING, said: “We expect headline UK inflation to stay below 1% this year, and, given the slack in the jobs market, we’d expect price pressures to stay fairly muted for some time.”

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