UK's inflation rate sinks to it's lowest since August 2016 due to pandemic

Amidst the coronavirus pandemic, Britain’s inflation rates have dropped to the lowest level they have been since early-mid 2016. According to reports, the pandemic and the resulting measure adopted in an effort to contain the deadly virus have resulted in a fall in global oil prices. This has increased the prospects of the Bank of England announcing another stimulus package in the near future.

Inflation rate below zero possible

As per reports, the consumer inflation rate in the month of April has dropped to 0.8% from 1.5% in the month of March. The fall in inflation rate in the month of April was the sharpest one-month fall in more than a decade and this resulted in the inflation rate going well below the Bank of England’s target of a 2% inflation rate.

According to reports, Ben Broadbent, the deputy governor of the Bank of England has reportedly claimed that the inflation rate could even drop below zero by the end of 2020. The bond-buying programme of the Bank of England has been increased by a record 200 billion pounds in the month of March given the escalation of the COVID-19 crisis.

Read: Covid-19: RBI Sees Inflation Falling Below 4 Pc Target By Mid-FY21

Read: Wholesale Price Inflation Cools To 1 Pc In March

As per reports, the Office for National Statistics has claimed that inflation readings at the moment were volatile and unreliable because of the shutdown. The coronavirus shutdown has resulted in price checkers only being able to accurately price one-fifth of the required goods and services, for all other products the ONS has had to guess the prices or use available substitutes.

The ONS also revealed that clothing retailers have resorted to giving out more discounts during the lockdown and the declining demand for energy, transport, clothing and footwear has played a major part in the inflation.

Read: Retail Inflation Eases To 5.91 Pc In March; Back In RBI's Comfort Zone

Read: Wholesale Inflation Eases To 2.26 Pc In Feb On Cheaper Food Articles, Vegetables

While reports show that household utility bills have shown a downward trend, there has been an upward trend in the price of video games and consoles, board games and children’s toys.

(Image Credit: AP)