The increase in prices for in-demand video game consoles during the novel coronavirus pandemic induced lockdown propped up British inflation for the month of June in an unexpected manner, shows the latest official data available.
There was a 0.6 per cent rise in consumer price inflation last month compared to the previous month, which was at 0.5 per cent, which was also driven by the lack of traditional summer clothing sales last month following the slashing of prices by retailers during the lockdown earlier in the year.
Economists and analysts had expected inflation of the country to come in at about 0.4 per cent.
“June’s inflation figures are slightly above expectations but there remains abundant spare capacity in the economy,” said Debapratim De, senior economist at Deloitte. “This should maintain a downward pressure on inflation, which could fall further, especially if there is a spike in unemployment later this year.”
A slower than expected 1.8 per cent growth in gross domestic product in May compared to that in April for the country was reported in the data published on Tuesday. In May, the GDP had fallen by growth 20 per cent. There can be shrinking of as much s 14.3 per cent this year in the British economy, according to the UK government’s budget forecasters.
There is also likelihood of a downward pressure on inflation because of an emergency cut to the VAT sales tax rate for hospitality and tourism sectors which came into effect from Wednesday.
The Bank of England will not be under any pressure to rethink its huge stimulus push because the rate of inflation in the country is well below the bank’s target of 2 per cent, say economists. It is likely that there will be persistent downward pressure on prices, said BoE rate-setter Silvana Tenreyro.
By the end of the year, inflation could hit zero, JPMorgan said.
At a time when there was a spike in demand from people who had been confined to their home because of the lockdown, a shortage of game consoles around the world was noted because of the impact on global supply chain of the novel coronavirus pandemic outbreak.
For the first three months of the year, when governments all around the world had imposed strict lockdown measures to prevent the spread of the pandemic, profits were reported the Japanese computer games giant Nintendo in May.
“It is possible that prices have been influenced by the coronavirus (COVID-19) lockdown changing the timing of demand and the availability of some items, particularly consoles,” the ONS said in a statement. “However, it is equally likely to be a result of the computer games in the bestseller charts.”
In June, when there are typically sales promotions in the UK, the prices of clothing and footwear prices almost held steady.
Because of the lockdown in June, there was unavailability of the 17 per cent of the items used to compile the CPI for consumers, the ONS said. That included pints of lager in pubs and haircuts.
(Source:www.reuters.com)
There was a 0.6 per cent rise in consumer price inflation last month compared to the previous month, which was at 0.5 per cent, which was also driven by the lack of traditional summer clothing sales last month following the slashing of prices by retailers during the lockdown earlier in the year.
Economists and analysts had expected inflation of the country to come in at about 0.4 per cent.
“June’s inflation figures are slightly above expectations but there remains abundant spare capacity in the economy,” said Debapratim De, senior economist at Deloitte. “This should maintain a downward pressure on inflation, which could fall further, especially if there is a spike in unemployment later this year.”
A slower than expected 1.8 per cent growth in gross domestic product in May compared to that in April for the country was reported in the data published on Tuesday. In May, the GDP had fallen by growth 20 per cent. There can be shrinking of as much s 14.3 per cent this year in the British economy, according to the UK government’s budget forecasters.
There is also likelihood of a downward pressure on inflation because of an emergency cut to the VAT sales tax rate for hospitality and tourism sectors which came into effect from Wednesday.
The Bank of England will not be under any pressure to rethink its huge stimulus push because the rate of inflation in the country is well below the bank’s target of 2 per cent, say economists. It is likely that there will be persistent downward pressure on prices, said BoE rate-setter Silvana Tenreyro.
By the end of the year, inflation could hit zero, JPMorgan said.
At a time when there was a spike in demand from people who had been confined to their home because of the lockdown, a shortage of game consoles around the world was noted because of the impact on global supply chain of the novel coronavirus pandemic outbreak.
For the first three months of the year, when governments all around the world had imposed strict lockdown measures to prevent the spread of the pandemic, profits were reported the Japanese computer games giant Nintendo in May.
“It is possible that prices have been influenced by the coronavirus (COVID-19) lockdown changing the timing of demand and the availability of some items, particularly consoles,” the ONS said in a statement. “However, it is equally likely to be a result of the computer games in the bestseller charts.”
In June, when there are typically sales promotions in the UK, the prices of clothing and footwear prices almost held steady.
Because of the lockdown in June, there was unavailability of the 17 per cent of the items used to compile the CPI for consumers, the ONS said. That included pints of lager in pubs and haircuts.
(Source:www.reuters.com)
