UK inflation rate falls to zero in February
UK inflation rate fell to 0% in February, the lowest since records began, official figures show.
Lower prices for food and computer goods helped to cut the rate from 0.3% in January, official figures show.
February’s figure is the lowest rate of Consumer Prices Index (CPI) inflation since estimates of the measure began in 1988.
The drop in the CPI measure was sharper than many analysts had expected, with most expecting a rate of 0.1%.
The February figure means that the cost of living is the same as it was a year earlier.
Ben Brettell, senior economist at Hargreaves Lansdown, said UK “took another step towards deflation” in February.
“It looks likely the rate will drop below zero at some point in the coming months, and hover around zero for most of the year,” he said.
In February, the Bank said that inflation could turn negative temporarily in the spring because of falling oil prices.
Cuts in energy bills are among the factors likely to push inflation lower in March, according to economists.
But unlike in the eurozone, where prices are already showing annual falls, many economists think UK consumer demand will remain steady in the face of falling prices, due to robust employment growth and signs of a pick-up in wages.
Falling prices for food, laptops, tablets and computer peripherals contributed to the fall in February’s CPI measure, the Office for National Statistics (ONS) said.
The ONS figures also showed the rate of Retail Prices Index (RPI) inflation fell to 1% from 1.1%.
Chancellor George Osborne told reporters that zero inflation was “good news for families”, and that voters faced a choice in the general election on 7 May.
“Frozen prices are a first for the British economy. This zero inflation is driven by falling petrol prices and falling food prices, so it’s good news for families,” he said.
However, Labour said inflation is falling around the world “because global oil prices have plummeted, yet in Britain wages continue to be sluggish.”
“A few months of falling world oil prices won’t solve the deep-seated problems in our economy,” said said Cathy Jamieson, Labour’s shadow Treasury minister.
Liberal Democrat Chief Secretary to the Treasury Danny Alexander said: “Coming alongside good growth and record numbers of jobs, Liberal Democrats in government are delivering a stronger economy and a fairer society.”
“It’s yet another month that sees earnings pulling ahead of prices, which will be a great help to millions of families.”