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UK inflation rate remains at 0%

14/04/2015

The UKs inflation rate stayed at 0% in March, according to official figures from the Office of National Statistics.

The 0% inflation rate means that the cost of living is now roughly the same as it was in March 2014. The Consumer Price Index (CPI), which measures inflation, recorded an unchanged rate from February thanks to a rise in petrol prices. Food prices fell by 3.2% annually, and clothing and footwear prices fell for the first time since the CPI started recording in 1996.

The 0% figure is the lowest since records began in the late 1980s. Estimates by economists believe it may be the lowest figure since the 1960s. The CPI figures leaves the Bank of England way below their 2% target for inflation.

Fallen prices may have benefitted households and fallen oil prices may have had a positive effect on businesses. The news was welcomed by Chancellor George Osborne, who tweeted:
“Our plan for working people gets another boost today with good news for family budgets - Inflation at zero for second month in a row.”

Vicky Redwood, chief UK economist at Capital Economics said:
“The UK just avoided deflation in March, but inflation could yet dip into negative territory at some point in the coming months.
“The indirect impact of lower energy prices will take a while to come through and so the core rate could drop further in the coming months, tipping the headline rate below zero. Even if the UK does narrowly avoid deflation, inflation is still likely to hover close to zero for most of 2015.”

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