• CPI inflation falls to 1.7%
• Oil prices dragged the figure lower in February
Laura Suter, personal finance analyst at investment platform AJ Bell, comments on the latest inflation figures from the ONS:
“Inflation fell slightly to 1.7% last month, just as the Coronavirus crisis was starting. A drop in the oil price, and in turn prices at the petrol pump, dragged inflation down slightly in February. This was before the oil price crash we saw at the start of March, as a result of a price war between Saudi Arabia and Russia. This means that in March we’ll see oil prices push inflation lower.
“However, the reaction to the Coronavirus crisis means that there are so many factors feeding into inflation figures in the next month. A rise in food and drink costs as a result of stockpiling and shortages is likely to filter through and provide upward inflationary pressure, in addition to the plummeting pound increasing the cost of any imports and so pushing up prices. However, competing against that is the slump in air travel, hotel bookings, restaurant use and in non-essential retail shopping.
“What’s more, the impact of Government and central bank intervention depends on the exact scale of the final bill for the Government – we’re certainly not at the end of the giveaways and funding from Rishi Sunak. This week alone there is expected to be more help for the self-employed, and it’s anyone’s guess what additional funding is around the corner. Until we know the final bill for the Government spending and how it’s constructed, it’s hard to tell the impact on the economy in future and on inflation in the short-term.”
