Britain’s annual inflation rate dropped to a near four-year low of 0.5% in May as cheaper petrol and the falling cost of toys and games had a downward impact on the cost of living.

In a move that is likely to prompt fresh stimulus from the Bank of England, the consumer prices index showed that inflationary pressure continued to abate during the Covid-19 lockdown.

The inflation rate as measured by the consumer prices index fell from 0.8% in April, moving further away from the government’s 2% target.

The Office for National Statistics said the biggest impact on May’s fall in inflation – the lowest since June 2016 – had come from the cost of transport, with low global oil prices leading to a drop of almost three pence a litre in the cost of petrol.

Weak domestic price pressures as a result of the restrictions placed on the economy since the end of March have also had an impact on inflation, which has fallen for four months in a row.

Clothing and footwear prices were more than 3% lower than in May 2019 – the lowest inflation rate for the sector in a decade – as retailers sought to shift stocks of unsold merchandise. Higher food and drink prices provided the only significant upward effect on inflation last month, the ONS said.

Samuel Tombs, the chief UK economist at the consultancy Pantheon Economics, said inflation would fall even closer to zero in the coming months. The City believes the Bank of England will respond to the weakness of price pressure on Thursday with a fresh £150bn of stimulus through its bond-buying quantitative easing scheme.

Separate figures for producer prices found few signs that inflation was likely to pick up soon. The cost of goods leaving factories was 1.4% lower than in May 2019, compared with a 0.7% drop the previous month. Producer prices are seen as a guide to cost pressures early in the pipeline.

The TUC general secretary, Frances O’Grady, said: “This fall in inflation shows the fragility of the economy in lockdown. But with strong action now, we can prevent lasting damage and build back better.

“The priority must be to protect and create jobs. The more people in work, the faster we can work our way out of recession. We need targeted support for hard-hit sectors of the economy and a jobs guarantee for those who do lose work.”