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HEALTH-VIRUS-BRITAIN-ECONOMY-INFLATION
UK inflation dips as virus curbs spark discounting: data
LONDON, March 24, 2021 (BSS/AFP) – Britain’s annual inflation rate eased
in February as coronavirus restrictions sparked heavy discounting by
retailers, particularly for clothing and footwear, official data showed
Wednesday.
The rate, as measured by the UK’s Consumer Prices Index (CPI), slowed to
0.4 percent last month from 0.7 percent in January, the Office for National
Statistics said in a statement.
Clothing and footwear saw the sharpest falls in more than a decade, with
prices tumbling 5.6 percent in the year to February — the largest drop since
late 2009.
“A fall in clothing prices helped to ease inflation in February,
traditionally a month where we would see these prices rise, but the impact of
the pandemic has disrupted standard seasonal patterns,” said ONS statistician
Jonathan Athow.
The data surprised markets because expectations had been for a February
reading of 0.8 percent.
“The surprise fall in CPI inflation in February was driven by a plunge in
clothing inflation,” noted economist Samuel Tombs at Pantheon Macroeconomics.
“The lockdown has left clothing retailers with considerable excess stock to
shift,” he added.
Much of the UK re-entered lockdown in early January to curb a winter surge
in Covid-19 infections and deaths.
Prime Minister Boris Johnson’s government is now targeting a phased
reopening on the back of a successful vaccine drive.
Wednesday’s data came one week after the Bank of England had warned that
the inflation rate would approach its 2.0-percent target level in the coming
months due to energy price hikes.
“We continue to think that the headline rate of CPI inflation will jump to
within a whisker of the 2.0 percent target by May, before climbing a little
further towards the end of this year,” said Tombs.
“This pick-up, however, will be driven primarily by a rebound in energy’s
contribution to the headline rate in the spring.”
The BoE left record-low interest rates at 0.1 percent last Thursday and
forecast economic growth would recover towards pre-Covid levels this year.
BSS/AFP/FI/ 1406 hrs