Wednesday, May 20, 2015
UK inflation has turned negative for the first time in over 50 years according to the latest figures from the Office of National Statistics.
The drop of 0.1% compared to April 2014 was driven by a fall in air and sea fares. There was also a significant fall in the cost of food with prices down 0.3% year-on-year.
Chancellor George Osbourne believes the lower cost of living will be a welcome relief for families and should not be confused with “damaging deflation”. The governor of the Bank of England, Mark Carney, echoed these sentiments and also said he expected inflation to remain low for some time to come.
Unfortunately, this is more bad news for savers as interest rates are likely to be kept on hold at 0.5%. Some analysts also believe negative inflation is indicative of underlying weakness in the British economy.