Cheaper clothes and fuel pushed inflation down to 1.5% in March
CHEAPER clothes and fuel pushed UK inflation down to 1.5 per cent in March.
The Consumer Price Index (CPI) fell from 1.7 per cent in February, according to the Office for National Statistics (ONS).
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Clothing prices dropped as retailers offered discounts when sales fell just before self-distancing measures were imposed as a result of coronavirus, the ONS said.
While oil prices have also crashed recently due to the pandemic, leading to cheaper fuel.
Earlier this week, oil prices plummeted into negative figures for the first time in history.
It means producers pay buyers to take oil off their hands over fears storage capacity could run out in May.
What is inflation?
INFLATION is defined as a general increase in prices and fall in the purchasing value of money.
It means you'll have to pay more for the same goods and services over time.
Inflation has a massive impact on people's wages and buying power which can really affect families' bank balances.
For example, if inflation is 10 per cent, a handbag costing £50 will be priced at £55 in a years time.
Inflation, which is measured by the Office for National Statistics, is also what the Bank of England uses as a guide when it is setting interest rates.
Check out our inflation guide for more information.
And yesterday, the cost of crude oil dived to an 18-year low of $23 per barrel - equivalent to 12p per litre.
Low inflation is typically good news for squeezed households as it means they have more money to spend.
But Sarah Hewin, senior economist at Standard Chartered, told the BBC's Today programme that today's figure is "an indication of the steep recession we will see in the coming months".
ONS head of inflation Mike Hardie said: "The inflation rate slowed again in March, mainly due to falling prices for clothing and motor fuel.
"Clothing prices normally rise between February and March as new year discounting ends."
"However, this year the price of clothes has eased due to some retailers offering discounts due to decreased footfall in stores before the lockdown started.
"The cost of raw materials for manufacturers fell significantly over the year, driven by a global fall in the price for crude oil."
Laura Suter, personal finance analyst at investment platform AJ Bell, said: "Oil prices have a massive impact on the UK’s inflation rate and with prices at the pump and home energy costs getting cheaper we’d expect this trend to continue for the next couple of months.
"Savers will welcome the news of a drop in inflation, as they have been pummelled with two further falls in the Bank of England base rate this year and a multitude of cuts to interest rates on savings accounts.
"However, it remains the case that no easy-access savings account meets the level of inflation, but savers who are willing to lock their money up for a year can at least keep pace with inflation."
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Inflation jumped to a six-month high in January due to rising petrol prices.
Meanwhile, the Bank of England cut interest rates twice in March to help reduce the economic shock caused by the coronavirus pandemic.
The central bank in the US - the Federal Reserve - has also slashed interest rates due to the crisis.
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