UK inflation rate falls to zero in February

That scurge of the UK economy- inflation, has been reduced to zero per cent.

UK inflation rate falls to zero in FebruaryUK inflation rate fell to 0% in February, the lowest since records began, official figures show.

Lower prices for food and computer goods helped to cut the rate from 0.3% in January, official figures show.

February’s figure is the lowest rate of Consumer Prices Index (CPI) inflation since estimates of the measure began in 1988.

The drop in the CPI measure was sharper than many analysts had expected, with most expecting a rate of 0.1%. The February figure means that the cost of living is the same as it was a year earlier.

For now at least, the fall in the price of food, games, petrol and energy, if it persists for a few months, is good news for most of us – because it increases our spending power and our pounds go further.

In other words we feel and are a bit richer. But if stagnation in prices were to go on for longer, if it were to turn into fully fledged deflation, that would be worrying.

The point is that if we thought that the price of things we don’t normally have to buy at any particular moment – household goods like washing machines for example, or motor cars – was on a firmly downward path, we would probably defer purchases of those things, and that would depress economic activity.

Low inflation could support UK economic growth, business lobby group the British Chambers of Commerce (BCC) said.

Last week, the Bank of England’s chief economist Andy Haldane said rates were as likely to need cutting as raising in the immediate future.

In February, the Bank said that inflation could turn negative temporarily in the spring because of falling oil prices.

Cuts in energy bills are among the factors likely to push inflation lower in March, according to economists.

But unlike in the eurozone, where prices are already showing annual falls, many economists think UK consumer demand will remain steady in the face of falling prices, due to robust employment growth and signs of a pick-up in wages.

Falling prices for food, laptops, tablets and computer peripherals contributed to the fall in February’s CPI measure, the Office for National Statistics (ONS) said. The ONS figures also showed the rate of Retail Prices Index (RPI) inflation fell to 1% from 1.1%.

Chancellor George Osborne told reporters that zero inflation was “good news for families”, and that voters faced a choice in the general election on 7 May.

“Frozen prices are a first for the British economy. This zero inflation is driven by falling petrol prices and falling food prices, so it’s good news for families,” he said.

April 3, 2015  Tags: , , , ,   Posted in: Business Growth, Business Sales, Business Win, Growing Business, Growing Economy, Uncategorized

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