UK in “deflation” as prices fall by 0.1%

Mark Carney insists negative inflation in costs of food, alcohol and petrol in the year to April is only temporary

Latest figures from the Consumer Prices Index (CPI) indicate that the UK is in deflation – or more accurately “negative inflation” – with prices down 0.1% in the year to April 2015.

The statistics, which mark the first time Britain has hit negative inflation since 1960, will come as good news for consumers looking for a better deal on food and petrol but concerning for the businesses who produce these items.

According to the study, the biggest price drops have been in food, alcohol, petrol, furniture and household goods, and clothing and footwear.

While many have referred to the statistics as a sign of deflation, the figures would appear to  be negative inflation – when prices drop for only a temporary period.

Bank of England governor Mark Carney has said that “we should not mistake this for damaging deflation” and only expects the economy to be in negative inflation for a “brief period”with the CPI picking up “notably” towards the end of the year.

Despite concerns for businesses in food and transport, in essence retail businesses and companies in the recreation sector should actually benefit from negative inflation as consumers have more money to spend on other things that aren’t a necessity.


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