Inflation fell to a four-year low of 0.5 per cent in May from 0.8 per cent in April as the cost of fuel continued to fall during the coronavirus pandemic, the latest official figures show. Prices for toys and games also fell.

The Consumer Price Index, which measures the cost of a hypothetical basket of goods and services, dropped further below the Bank of England’s target of 2 per cent.

The Office for National Statistics’ preferred measure of inflation, which includes housing costs for homeowners, fell to 0.7 per cent in May from 0.9 per cent in April.

Jonathan Athow, deputy national statistician for economic statistics at the Office for National Statistics (ONS), said: “The growth in consumer prices again slowed to the lowest annual rate in four years.

“The cost of games and toys fell back from last month’s rises while there was a continued drop in prices at the pump in May, following the huge crude price falls seen in recent months.

“Outside these areas, we are seeing few significant changes to the prices in the shops.”

May’s figures also included an alternative measure using an experimental set of goods and services which exclude items that were not widely available during lockdown, such as international air travel, so that the ONS can attempt to gather a better picture of underlying inflation.

On this reading, inflation was even lower than the official rate, coming in at 0.4 per cent, or 0.6 per cent when housing costs are included.

Falling inflation will increase pressure on the Bank of England’s Monetary Policy Committee (MPC) to reduce interest rates at the next meeting on Thursday.

The Bank’s base rate is already at a historic low of 0.1 per cent with speculation that it could go below zero for the first time.

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