The UK inflation rate fell dramatically to 0.8% in April, meaning that the coronavirus pandemic has resulted in a significant slowdown in the growth of consumer prices in the country.
The year-on-year growth in prices, down from 1.5% in March, is the lowest since August 2016. Compared with March, prices fell by 0.2% in the month, according to the Office for National Statistics (ONS).
Calling the direct effects of the lockdown “muted,” the ONS said the largest downward contribution to price growth came from housing, water, electricity, gas and other fuels, while a sharp fall in the cost of motor fuels dragged down the cost of transport during the month.
Noting that motor fuel prices tended to move “broadly in line” with that of oil, the ONS pointed to crude oil prices hitting a 21-year low due to coronavirus-related work and travel restrictions.
“Falling petrol and diesel prices, combined with changes to the domestic energy price cap were the main reasons for lower inflation in April,” said Jonathan Athow, the deputy national statistician for economic statistics at the ONS.
Nonetheless, clothing and footwear also had a large downward contribution, with the prices of garments falling by 2.3% compared with March.
The slowdown was partially offset by a 0.4% jump in prices in the recreation and culture category, while the prices of games, toys, and hobbies — which includes items such as games consoles and craft kits — rose 0.5% in the month.
Food prices fell by 0.1% between March and April, a smaller drop than the 0.3% decline seen in the same months in 2019.
Prices of takeaway and delivery pizzas climbed by 7.3% in the month, however, while those of takeaway burgers rose by 4.6% in the month.
The ONS noted that its monthly assessment of inflation was hampered by coronavirus restrictions, since it was unable to add items such as a pint of beer or theatre tickets to its virtual “shopping basket.”
The weeks-long lockdown introduced by the UK government in March is widely expected to lead to a deep slowdown in the UK economy, and growth in consumer prices is expected to slow further in the short term as a result.
Some analysts have suggested that the unprecedented stimulus measures launched in the UK may eventually lead to runaway inflation.
But the country experienced a decade of low inflation following the 2008 financial crisis even after the Bank of England slashed interest rates and launched a sweeping asset-purchasing programme.
The bank in March lowered its benchmark interest rate to an all-time low of 0.1% and dramatically increased asset purchases.
Price stability is one of the core mandates of the bank, which has a 2% inflation target.
Watch the latest videos from Yahoo Finance UK