2020欧洲杯小组赛赛程

Plunging petrol prices push down inflation ahead of coronavirus hit

Economists think inflation will fall to below 1pc as Covid-19 saps demand from the economy

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Rapid falls in petrol prices helped keep a lid on living costs last month and gave the first signs of an inflation slowdown likely to be triggered by the economic hit from the coronavirus.

Petrol fell from 127p a litre to 124p in February, the Office for National Statistics said, while diesel dropped even more quickly, as the collapse in global oil prices started to reach drivers.

The plunge in the value of crude - driven by a slump in demand as the pandemic confines billions of people to their homes, and a Saudi-Russian price war - could be a sign of things to come in other markets, economists believe.

Inflation stood at 1.7pc higher in February as measured by the consumer price index (CPI), down from 1.8pc in January.

The drop will felt most keenly by drivers. The latest weekly numbers show the average price of a litre of petrol is below 120p.

Bill payers will also benefit in coming months, with lower global energy prices and a cut to the Ofgem price cap from April expected to reduce gas and electricity costs.

Manufacturers reported a 0.5pc fall in the price of the goods and resources they need for production, which should also keep inflation down.

Ruth Gregory, of Capital Economics, said: “Air fares and travel costs will plunge, with fuel prices tumbling and demand through the floor.

2020欧洲杯小组赛赛程“One element which might potentially go in the opposite direction is food prices, which have probably held up well in response to the recent high demand especially for things like pasta, rice and tinned goods."

She added that a sharp fall in sterling as investors piled into dollars to protect themselves from worldwide market plunges will also push prices up.

There are separate warnings that a shortage of migrant labour could lead to a surge in soft fruit prices over the summer as farmers lack the workers required to gather the harvest.

2020欧洲杯小组赛赛程The net effect is still likely to be a fall in inflation, however.

2020欧洲杯小组赛赛程Samuel Tombs, of Pantheon Macroeconomics, said: “CPI inflation looks set to decline sharply over the coming months."

2020欧洲杯小组赛赛程He expects a drop to well below 1pc over summer, forcing Bank of England Governor Andrew Bailey to write a letter to the Chancellor explaining why inflation has missed a target of 2pc give or take one percentage point.

2020欧洲杯小组赛赛程The usual reaction to below-target inflation is to cut interest rates that are already at record lows.

Once the crisis is over, ultra-low rates, Bank of England money-printing and huge Government spending could push inflation up well above the target, according to Tim Congdon at the Institute of International Monetary Research.

2020欧洲杯小组赛赛程The shutdown will pose challenges for statisticians who visit shops and restaurants to check prices every month.

Officials will have to decide how to calculate inflation when items are missing from the shelves - toilet rolls and soap are among the goods counted in the CPI - or when restaurants and clothes shops are closed altogether.

2020欧洲杯小组赛赛程They do track online prices, but using digital stores and takeaways as substitutes for more traditional shops could create problems comparing the numbers with prices a year ago.

It may also be difficult to calculate the correct weightings for the average shopping basket as demand has risen for some goods and plunged for others, such as travel.