UK economy is in deflation
19th May 2015

The UK economy went into negative inflation last month, for the first time in over half a century.

The Consumer Price Index fell by 0.1% in the year to April, compared to no change in the year to March. This is the first time the CPI has fallen over the year since official records began in 1996 and the first time since 1960 based on comparable historic estimates.

Economists say the underlying cause of the fall is temporary, coming from air and ferry fares and a quirk in the timing of the Easter holidays, and us unlikely to result in a sustained fall in the cost of living.

Chancellor George Osborne said the figures were good news for family budgets, a sentiment that may be reflected by many in our industry and supported by some economists. Ian Stewart, chief economist at consultants Deloitte said that falling prices raise consumer spending power, while Scotiabank economist Alan Clarke warned: “enjoy it while it lasts; there is a good chance that inflation will be back in positive territory next month.”