© Reuters. FILE PHOTO: People shop at a market stalls, amid the coronavirus disease (COVID-19) outbreak, in east London
By David Milliken and Andy Bruce
LONDON (Reuters) -British inflation unexpectedly fell last month, reflecting the biggest annual drop in clothing prices since 2009 and cheaper second-hand cars, official figures showed on Wednesday.
The annual rate of consumer price inflation dropped to 0.4% in February from 0.7% in January, in sharp contrast to economists’ average forecast in a Reuters poll of a rise to 0.8%.
“The impact of the pandemic has disrupted standard seasonal patterns, ONS Deputy National Statistician Jonathan Athow said. “A fall in clothing prices helped to ease inflation in February, traditionally a month where we would see these prices rise.”
Sterling weakened slightly against the U.S. dollar after the figures came out.
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.
The Bank of England and other economists expect inflation to rise sharply back towards the BoE’s 2% target in the first half of this year, reflecting a rise in oil prices, increases in regulated household energy prices and other one-off effects.
Wednesday’s data from the Office for National Statistics showed that producer prices – which tend to feed through into consumer prices later – were 2.6% higher than the year before in February.
Core consumer price inflation – which excludes more volatile food and energy prices – dropped to 0.9% from 1.4%.
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