Rolling coverage of the latest economic and financial news, as UK inflation hits its lowest level since 2016
- Latest: WTO says goods trade shrinking fast
- Eurozone inflation drops to just 0.3%
- UK annual inflation almost halved last month
- Petrol and clothes prices fell…….toys, pizza and burgers went up
- What the experts say
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My colleague Joanna Partridge has travelled to Bushey, near Watford, to meet some of the McDonalds customers keen to buy fast food again:
An hour after reopening for the first time in 8 weeks, a queue of cars containing customers hungry for Big Macs and Happy Meals has formed outside the McDonald’s drive-through in Bushey, east of Watford.
A McDonald’s employee in a high-vis jacket is marshalling the queue of vehicles as the line stretches beyond the restaurant’s waiting area onto the A41. Ruby Hibbitt, 18, and her housemate Paige Bush, 19, had been told by a friend that the restaurant was open and had got straight in the car to buy lunch.
The Bank of England’s new governor, Andrew Bailey, must write to the UK chancellor to explain why inflation is just 0.8%, far from its target of 2%.
But what might he say? Our economics editor Larry Elliott has some ideas:
He might start by saying that the shuttering of much of the economy meant the April inflation rate had to include a bit of informed guesswork on the part of the Office for National Statistics (ONS) – because the usual field surveys that go into collecting prices were impossible during lockdown – but that the main reason for the drop in inflation was the collapse in oil prices, owing to a mismatch between global demand and supply.
But Bailey will also tell Sunak that underlying inflationary pressures are also weak. Clothing prices fell sharply because retailers were desperate to get rid of excess stock. The cost of travel goods were also down because nobody is travelling.