The slump in the oil price has also driven down producer price inflation (basically, how much companies charge for their goods charge) to -0.7%.

That means goods at the factory gate are actually cheaper than a year ago, suggesting consumer price inflation will remain low in the coming months.

The ONS says:

• The price for materials and fuels used in the manufacturing process displayed negative growth of 9.8% on the year to April 2020, down from negative growth of 3.1% in March 2020.
• Petroleum products made the largest downward contribution to the change in the annual rate of output inflation.
• Crude oil provided the largest downward contribution to the annual rate of input inflation.

Although overall inflation fell, the cost of games rose in April — as families scrambled to find interesting things to during the lockdown.

The ONS explains:

There was an upward contribution (of 0.11 percentage points) from games, toys and hobbies where prices for items like computer games consoles, preschool activity toys, craft kits, dolls, construction toys, and sit and ride toys overall rose by 0.5% in the month compared with a fall of 5.8% a year ago.

There were further upward contributions of 0.07 percentage points from data processing equipment, principally computer software, and 0.05 percentage points from recording media, including CDs and DVDs purchased online and music downloads.

Stock shortages drove up wool prices rose last month — perhaps due to isolating Brits taking up knitting?

The ONS says:

For other clothing and accessories, most of the upward movement came from balls of knitting wool, where there were recoveries from sales and higher price comparable items as a result of stock shortages in some stores.

Petrol prices hit their lowest level in four years, today’s inflation report shows:

Petrol prices fell by 10.4 pence per litre between March and April 2020, to stand at 109.0 pence per litre, and diesel prices fell by 7.8 pence per litre, to stand at 116.0 pence per litre.

In comparison, between March and April 2019, petrol and diesel prices increased by 3.8 and 2.3 pence per litre to stand at 124.1 and 133.0 pence per litre, respectively. Petrol prices were last lower in May 2016 (when a litre cost 108.7 pence), and the 10.4 pence per litre drop in petrol prices is the largest monthly fall since the current ultra-low sulphur or unleaded petrol series began in 1990.

Good news for drivers! But there is a proviso. With millions of employees working from home, and non-essential driving curbed, few will have actually benefited much from cheaper fuel prices.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business

Britain’s inflation rate has fallen to its lowest rate in over three and a half years last month, due to a drop in energy prices and discounting by shops desperate to sell stock during the Covid-19 lockdown.

The Consumer Price Index plunged to just 0.8% year-on-year in April, the Office for National Statistics reports, down from 1.5% per year in March.

That’s its lowest rate since August 2016.

In April alone, prices fell by 0.2%, bringing some relief to struggling households and firms.

Cheaper energy bills and petrol prices has a downward impact on the cost of living.

That’s due to falling crude prices as the coronavirus outbreak hits demand, and the cap on UK energy bills. Gas prices, for example, fell by 3.5%.

The ONS says:

• Falling energy and fuel pump prices resulted in the largest downward contributions to the change in the inflation rate between March and April 2020.
• Rising prices for recreational goods resulted in a partially offsetting upward contribution to change.

Discounting was also a factor — with clothes prices dropping last month during the lockdown:

The ONS explains:

For garments, prices overall fell by 2.3% between March and April 2020 compared with a small increase of 0.4% a year ago. There were a greater number of items recorded as being discounted this year, when compared with April 2019, with reductions across a range of women’s and men’s clothing items.

The larger number of items recorded as being on sale could reflect retailers’ efforts to encourage online purchases or potential difficulties as a result of the current economic situation.

More to follow….

Also coming up today

Inflation data from the eurozone and Canada are expected to also show a sharp slowdown last month.

David Madden of CMC Markets has the details:

Eurozone CPI for April is anticipated to fall from 0.7% in March to 0.4% in April. The core update is anticipated to be 0.9%, and that would be a fall from the 1% registered in March. The figures will be announced at 10am (UK time).

Canadian CPI will be released at 1.30pm (UK time). The report is expected to be -0.1% and that would be a huge drop from the 0.9% posted in March.

UK high street chain Marks & Spencer is reporting results, updating the City on its performance during the lockdown. And there could be queues at your local McDonalds outlets, as the fast food chain reopens around 40 outlets across the county.

The agenda

• 10am BST: Eurozone inflation data for April
• 1.30pm BST: Canadian inflation data
• 2.30pm BST: Bank of England governor Andrew Bailey and colleagues testify to parliament’s Treasury committee