{"id":110394,"date":"2021-03-24T09:32:41","date_gmt":"2021-03-24T09:32:41","guid":{"rendered":"https:\/\/fin2me.com\/?p=110394"},"modified":"2021-03-24T09:32:41","modified_gmt":"2021-03-24T09:32:41","slug":"slump-in-clothes-prices-causes-surprise-uk-inflation-dip","status":"publish","type":"post","link":"https:\/\/fin2me.com\/markets\/slump-in-clothes-prices-causes-surprise-uk-inflation-dip\/","title":{"rendered":"Slump in clothes prices causes surprise UK inflation dip"},"content":{"rendered":"
LONDON (Reuters) – British inflation unexpectedly fell last month, reflecting the biggest annual drop in clothing prices since 2009 and cheaper second-hand cars, toys and computer games, though most economists see sharper price rises ahead.<\/p> The annual rate of consumer price inflation dropped to 0.4% in February from 0.7% in January, the Office for National Statistics said, in contrast to economists\u2019 average forecast in a Reuters poll of a rise to 0.8%.<\/p>\n \u201cThe impact of the pandemic has disrupted standard seasonal patterns,\u201d ONS Deputy National Statistician Jonathan Athow said. \u201cA fall in clothing prices helped to ease inflation in February, traditionally a month where we would see these prices rise.\u201d<\/p>\n Sterling weakened slightly against the U.S. dollar after the figures came out.<\/p>\n The Bank of England and others expect inflation to rise sharply back towards the BoE\u2019s 2% target in the first half of this year, reflecting higher oil prices, increases in regulated household energy bills and other one-off effects.<\/p>\n \u201cFrom April we\u2019ll also see the headline rate of inflation leap on energy prices, partly because we\u2019ll no longer be comparing petrol prices to pre-pandemic levels, but also because the household energy price cap will rise to 9%,\u201d ING economist James Smith said.<\/p>\n Few economists expect the rise in inflation – which may include a small overshoot of its 2% target – to prompt the British central bank to begin raising interest rates.<\/p>\n Related Coverage<\/p>\n<\/p>\n Unemployment is forecast to rise later this year when government job support measures end, putting downward pressure on wages and prices for the next year or two.<\/p>\n Clothing and footwear prices fell between January and February for the first time since 2007 and are 5.7% lower than a year before, the biggest annual decline since November 2009, reflecting a widespread drop in demand due to the pandemic.<\/p>\n Price falls were mostly for women\u2019s clothes and shoes. Normally prices steadily rise with the launch of new spring and summer ranges after the January sales.<\/p>\n But high-street clothing retailers were shut across Britain in February due to lockdown restrictions that have closed all non-essential stores.<\/p>\n Children\u2019s toys such as dolls and scooters, as well as computer games – where prices fluctuate significantly – were also cheaper, the ONS said.<\/p>\n Prices for second-hand cars, which rose last year as people avoided public transport during the pandemic, fell by 1.8%.<\/p>\n But petrol prices rose by 2.9% and factories\u2019 raw materials costs – which tend to feed through into consumer prices later – were 2.6% higher than the year before in February.<\/p>\n