Computer games drive inflation pickup but trend is down
By Sean Farrell
Date: Wednesday 15 Jul 2020
(Sharecast News) - Inflation rose for the first time this year to but the pickup was caused mainly by volatile computer game prices and economists said the trend was still downwards.
The annual rate of consumer price inflation rose to 0.6% in June from 0.5% in May, exceeding economists' average forecast of 0.4%, the Office for National Statistics said.
The main contributor to June's increase was computer games and consoles whose prices rose 1.8% compared with a fall of 4.7% a year earlier. The ONS said the increase could have been caused by a jump in demand during the Covid-19 lockdown, a shortage of consoles or which computer games were in the bestseller charts.
Clothing prices also rose from a year earlier as retailers discounted clothes earlier in the year but food prices fell.
"The inflation rate has increased for the first time this year, but remains low by historical standards," Jonathan Athow, the ONS's deputy national statistician for economic statistics, said. "Due to the impact of the coronavirus, clothing prices have not followed the usual seasonal pattern this year, with the normal falls due to the start of the summer sales failing to materialise. Prices for computer games and consoles have risen, but food prices, particularly vegetables, have fallen."
Economists said they expected prices to begin falling overall again once the computer game and clothing blips subside. The economy is in the deepest recession since world war two and official figures on Tuesday showed growth failing to rebound as expected from the government's withdrawal of the Covid-19 lockdown.
Debapratim De, senior economist at Deloitteåç, said: "June's inflation figures are slightly above expectations but there remains abundant spare capacity in the economy. This should maintain a downward pressure on inflation, which could fall further, especially if there is a spike in unemployment later this year.
"A deflationary environment and elevated uncertainty means interest rates are likely to remain at ultra-low levels well into next year."
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