The National Statistics Office said the biggest impact on lower inflation in May – the lowest since June 2016 – came from the cost of transportation, with low world oil prices driving almost three pence down per liter of the cost of gasoline.
Weak domestic price pressures due to economic restrictions since the end of March also had an impact on inflation, which fell for four consecutive months.
Prices for clothing and footwear were more than 3% below May 2019 – the lowest inflation rate in the industry in a decade – as retailers sought to move inventories of unsold goods. Rising food and drink prices provided the only significant upward effect on inflation last month, the ONS said.
Samuel Tombs, the UK’s chief economist with consultancy Pantheon Economics, said that inflation would fall even closer to zero in the coming months. The city estimates that the Bank of England will respond to weak price pressure on Thursday with £ 150 billion in stimulus thanks to its quantitative easing bond program.
Separate figures for producer prices found little evidence of a rapid rise in inflation. The cost of goods leaving factories was 1.4% lower than in May 2019, compared to a 0.7% drop the previous month. Producer prices are seen as a guide to cost pressures at the start of the pipeline.
TUC Secretary General Frances O’Grady said: “This drop in inflation shows the fragility of the economy in recession. But with strong action now, we can prevent lasting damage and rebuild better.
“The priority must be to protect and create jobs. The more people there are at work, the sooner we can get out of the recession. We need targeted support for the hard-hit sectors of the economy and job security for those who lose their jobs. “