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Fresh food prices set to SURGE as coronavirus crisis cripples UK economy – warning

UK inflation slipped lower in March on the back of falling clothes and motor fuel prices, official figures show. The Office for National Statistics (ONS) said the rate of Consumer Price Index (CPI) inflation decreased to 1.5 percent in March. Speaking to BBC Radio 4’s Today Programme, economist Sarah Hewin warned that as a result, food prices will soon go up.


She said: “Under normal circumstances, low inflation would mean that people have effectively more to spend in the shops.

“But, of course, these are not normal circumstances and the fall in inflation, if it’s in addition to the impact of low energy prices, that’s a reflection of the deep recession which is likely to emerge in the coming weeks and months.”

She added: “We could see inflation picking up again.

“Again, energy prices probably will play a part because we will probably see energy prices normalise next year and the impact that that has on inflation will be reflected in the CPI rate.

“There’s another factor though which is what happens to food prices over the next few weeks, because we know that there’s reduced availability of fresh food from Europe and even within the UK.

“So there we may see upward prices on fresh foods and other foods and that could result in inflation not falling maybe as fast as we expect.”

Analysts at Pantheon Macroeconomics predicted that the headline rate of inflation would slow to 1.6 percent.

CPI inflation was reported at 1.7 percent in February, after declining slightly from the previous month.

ONS head of inflation Mike Hardie said: “The inflation rate slowed again in March, mainly due to falling prices for clothing and motor fuel.

“Clothing prices normally rise between February and March as new year discounting ends.

“However, this year the price of clothes has eased due to some retailers offering discounts due to decreased footfall in stores before the lockdown started.

“The cost of raw materials for manufacturers fell significantly over the year, driven by a global fall in the price for crude oil, which is at its lowest level since early 2016.”

Oil prices slumped again on Wednesday, with Brent falling to the lowest since 1999, as the market struggled with a massive crude glut amid a collapse in demand for everything from gasoline to jet fuel caused by the coronavirus outbreak.

Brent crude, which fell 24 percent in the previous session, touched $15.98 a barrel, its lowest since June 1999. It was trading down $2.37, or 12 percent, at $16.96 at 0511 GMT.

West Texas Intermediate was down 51 cents, or 4.4 percent, at $11.06 a barrel.

The falls follow two of the wildest days in the history of oil trading, as worldwide supply looks set to overwhelm demand for months to come and current production cuts fall far short of offsetting that glut.

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The front-month U.S. contract fell into negative territory for the first time in history on Monday and set a record for the number of contracts traded on Tuesday.

Oil prices have slumped by around 80 percent this year as the pandemic has spread across the world, killing almost 180,000 people, routing financial markets and leading to what could be the worst economic meltdown since the depression of the 1930s.

The viral outbreak has caused fuel demand to drop by roughly 30 percent worldwide and energy companies in the United States, the world’s biggest producer, are scrambling to find storage for excess oil.

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