Latest News

Catch up with all the latest tax and accountancy news in this section. If you would like to sign up to our newsletter and recieve monthly updates of tax news and special offers please subscribe to our newlsetter.


UK inflation remains at 0% but analysts dismiss fears of deflation

Date Published: 17/04/2015

Official figures from the Office for National Statistics (ONS) show that the UK's inflation rate remained at a record low of 0% in March.

It is the second successive month that Consumer Prices Index (CPI) inflation has been at zero - and February’s figure was the lowest since estimates of the measure began in the late 1980s.

Furthermore, if the rate of inflation is calculated to two decimal places, the cost of living is slightly less than a year before, with prices being 0.01% lower than 12 months ago - the first annual fall of CPI inflation on record.

The ONS report suggests that clothing and footwear prices fell in the month, offset by rising prices in petrol and diesel in February and March.

The zero CPI figure leaves inflation well below the Bank of England target of 2%. However, few analysts believe that there is a serious risk of entrenched deflation of the type suffered by Japan in recent years.

Rain Newton-Smith, director of economics at the CBI business group, said: ‘Inflation should start to pick up in the second half of the year, especially as the downward pressure from lower oil prices eases.’

Meanwhile, Maike Currie of Fidelity Personal Investing believes that the figures indicate ‘disinflation’ rather than deflation. He said: ‘Food, fuel and energy are all essential items to the consumer. No-one is going to delay their purchases of any of these in anticipation of future price falls. So the effect of these factors is therefore likely to be relatively short-lived.

‘It is important for investors to distinguish between unhealthy deflation, a self-perpetuating spiral of falling prices, and disinflation, a slowdown in the rate of inflation. Don't confuse the two. Disinflation is good news – it lines the pockets of consumers and boosts the economy’.

Newsletter

Keep up to date with tax news that affects you.

Sign Up

Testimonials

Read more

Tax Advice Centre

Find out all you need to know about tax & accountancy with our free, easy to use guides and calculators

Learn More

The Guardian News Article

How to find an accountant to do your tax return

Learn More

We work with

subscribe to our newsletter