Inflation slides to 0%
INFLATION fell to a new low of 0% in the year to February, the official figures showed today.
Last month’s fall in the CPI rate – from 0.3% in January – represents a record low.
Richard Campbell from the Office of National Statistics said the falls in the price of motor fuels and food had taken inflation to zero.
The fall in inflation to zero is more than economists expected. The forecast was for CPI to fall to 0.1% in February from January’s 0.3%.
Price movements in recreational goods and food, furniture and furnishings helped to cut the rate from 0.3% in January, Office for National Statistics figures show.
February’s figure is the lowest rate of consumer prices index (CPI) inflation since estimates of the measure began in 1988.
Food prices fell by 3.4% in the year to February, while prices of motor fuels were 16.6 % lower.
Danny Alexander, the chief secretary to the Treasury, said: “Today’s zero inflation is the right sort of price freeze, with low oil prices feeding through to prices.”
Rain Newton-Smith, director of economics at CBI said: “Despite inflation dropping to zero, it is unlikely we will see falling prices for a prolonged period, particularly as the pressure from lower oil prices fades.
“While lower oil prices are cutting costs for businesses, and leaving households with more money in their pockets, North Sea oil producers are taking a hit. The measures to support the industry in the Budget will help address concerns over job losses and investment freezes, but it is not out of the woods yet.
“With the Monetary Policy Committee still alert to the risk of very low inflation becoming entrenched, a rise in interest rates anytime soon seems off the cards.”
