Last year was, according to the ONS, who compile the data, a year of historically low inflation, with the CPI hovering around zero.
Globally, inflation has been muted, with some Eurozone countries flirting with deflation.
Here in the UK, the main factors in the fall in CPI were a large drop in the price of air fares between February and March this year, a reduction of 14.2%. This is set against a rise of 4.5% seen in these prices in the same period last year. The cost of clothing and footwear also fell as retailers dropped prices to boost sales following April’s cold weather.
If the costs of food, energy, tobacco and alcohol are stripped out of the calculation, the so-called core inflation rate, fell to 1.2%.
Following this trend, the wider Retail Prices Index (RPI), a barometer measure still used for some future rent and pension calculations, also fell from an annual rate of 1.6% in March to 1.3% in April.
These falls in inflation, to below the Bank of England’s target level of 2%, required the Governor, Mark Carney, to write his sixth letter to the Chancellor of the Exchequer, to explain the reasons. In this he said: “The underlying causes of the below-target inflation of the past year and a half have been: sharp falls in commodity prices, the past appreciation of sterling, and to a lesser degree the subdued pace of domestic cost growth.”
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