The UK economy contracted by two per cent in the first quarter of 2020, data from the Office for National Statistics (ONS) revealed on Wednesday. That was the fastest decline in output since the fourth quarter of 2008. Gross domestic product fell by 5.8 per cent in March alone, the biggest monthly fall since the data series began in 1997.

“Services and construction saw record declines on the month with education, car sales and restaurants all falling substantially. The pandemic also hit trade globally, with UK imports and exports falling over the last couple of months, including a notable drop in imports from China,” said Jonathan Athow, deputy national statistician for economic statistics at ONS.

Meanwhile, a key measure of US consumer prices fell by a record amount in April as lockdowns due to COVID-19 caused demand to plummet.

The Labour Department said on Wednesday that its headline consumer price index (CPI) slid by 0.8 per cent in April after falling by 0.4 per cent in March. The drop in the index, which matched economists’ estimates, represents the largest monthly decline in consumer prices since December of 2008.

Excluding volatile items like food and energy, CPI fell by 0.4 per cent, following a decline of 0.1 per cent in March. The April CPI print is the latest in a long and growing list of economic indicators that have posted record declines amid the coronavirus pandemic. Going forward, the indicator will be watched closely as falling prices over a sustained period could spark deflation, which would likely delay any economic recovery.

Finally, China’s consumer price inflation eased in April on falling food prices as the country attempts to restore economic activity amid consolidated pandemic containment efforts, official data showed on Tuesday.

China’s consumer price index, the main measure of consumer inflation, grew by 3.3 per cent year on year last month, moderating from the 4.3 per cent gain in March, according to data from the National Bureau of Statistics. Month on month, consumer prices went down by 0.9 per cent. Food prices, which account for nearly one-third of the weighting in China’s CPI, dropped by three per cent last month.

Tuesday’s data also showed that China’s producer price index, which measures inflation at the factory gates, fell by 3.1 per cent year on year last month.

This report was compiled by Bank of Valletta Ltd for general information purposes only.