How low inflation is hiding steep rises in your shopping bills
PUBLISHED: 18:12 18 June 2020 | UPDATED: 18:25 18 June 2020
Motorists returning to work after lockdown may have been cheering a record fall in fuel prices that helped push the inflation rate down to a four year low, but households saw rising prices to their weekly shopping bills.
The Office for National Statistics (ONS) said the rate of Consumer Price Index (CPI) inflation fell to 0.5pc in May, the second full month of the coronavirus lockdown, from 0.8pc in April - the lowest since June 2016.
Fuel prices, including petrol, tumbled by 16.7pc in May - the biggest fall on record - while energy costs dropped 7pc and clothing and footwear prices fell 3.1pc as retailers resorted to heavy discounts amid the lockdown.
But food and alcohol prices saw steep rises - up 1.8pc and 2.6pc respectively - while the cost of toys and games eased back after surging in April as families looked to entertain children in the lockdown.
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Meat, fresh fish, oils and fats and fresh fruits all rose in price by over 2pc, though sugar, jam, syrups, chocolate and confectionery only saw a slight 0.4pc increase, perhaps due to supermarket discounting items amid a surge in interest in baking and snacking from those in lockdown.
The ONS said it was unable to collect prices on 14pc of goods and services that were unavailable due to the lockdown, such as foreign holidays and haircuts.
It added that using an alternative basket of goods, which removes items not available, CPI would have been even lower - at 0.4pc in May.
With families stocking up on essentials rising costs of day-to-day items will have hit households amid the crisis, especially after figures showed wages, excluding bonuses, grew at an annual rate of just 1.7%, the weakest since January 2015.
However overall ultra-low inflation driven by fuel prices will offer some relief in the longer term, especially if reopening shops feel the need to slash prices to lure back customers.
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The latest data showed that average petrol prices fell to 106.2p a litre last month, while diesel dropped to 113.4p - levels not seen since 2016.
“There was a continued drop in prices at the pump in May, following the huge crude price falls seen in recent months,” ONS deputy national statistician Jonathan Athow said.
Fuel prices have been falling sharply as the global cost of oil has been hit hard by the coronavirus crisis, with lockdowns worldwide affecting demand, though crude prices began bouncing back last month.
Inflation has also been driven lower in recent months by falling energy prices after regulator Ofgem reduced its default tariff cap.
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