British inflation unexpectedly fell in March, reflecting the biggest annual drop in clothing prices since 2009 and cheaper second-hand cars, official figures showed on Wednesday.

The annual rate of consumer price inflation dropped to 0.4 per cent in February from 0.7 per cent in January, in sharp contrast to economists’ average forecast in a Reuter’s poll of a rise to 0.8 per cent.

“The impact of the pandemic has disrupted standard seasonal patterns.

“A fall in clothing prices helped to ease inflation in February, traditionally a month where we would see these prices rise,” Office for National Statistics (ONS) Deputy National Statistician, Jonathan Athow, said.

Clothing and footwear prices fell between January and February for the first time since 2007 and are 5.7 per cent lower than a year before, the biggest annual decline since November 2009, reflecting a widespread drop in demand due to the pandemic.
The Bank of England and other economists expect inflation to rise sharply back towards the BoE’s 2 per cent target in the first half of 2021, reflecting a rise in oil prices, increases in regulated household energy prices and other one-off effects.

ONS data on Wednesday showed that producer prices, which tend to feed through into consumer prices later, were 2.6 per cent higher than the year before in February.
Core consumer price inflation, which excludes more volatile food and energy prices had dropped to 0.9 per cent from 1.4 per cent.