Inflation Falls to Just Above Zero

Figures released today by the Office of National Statistics reveal that inflation in August 2020 is at its lowest rate since August 2015 at 0.2%pa and down from 1% in July 2020.

These figures were expected and are below the Bank of England’s 2%pa usual 'trend growth' inflation target.

The largest contributors were falling food prices in pubs, cafes and restaurants due to the 'Eat Out to Help Out' scheme, lower air fares, clothing prices and VAT cuts as part of the government's stimulus package

Second-hand cars, accommodation services, games, toys, and hobbies were the largest upward price contributors with people being able to finally go out and buy cars or buy items in connection with 'home isolation' i.e. gaming, hobbies and interests.

Comment

Short term inflation will stay low for perhaps a year but we cannot see this happening when and if we pull away from coronavirus and the 'aftershocks' of a global recession.