Tuesday, 19 May 2015

Britain is in Deflation - First time Since 1960, Prices of Goods and Services Falls!!!

For the first time since 1960, Britain has fallen into deflation. Modelled data produced by the Office for National Statistics (ONS) suggest it is also the lowest rate since 1960.
Economists had predicted inflation would remain at zero in April. However, most said negative inflation in the UK was likely to be short-lived.
The biggest drag on inflation last month was a 3pc fall in food prices and cheaper diesel and petrol costs, which fell by 12.3pc in the year to April, even though prices have bounced back over the past few months. The ONS said these two components alone dragged down the headline rate by 0.7 percentage points.
The timing of the Easter holiday - which pushed up travel costs in last year's calculation - but did not affect this year’s data - also dragged the headline rate down by 0.1 percentage points, according to the ONS. "Price changes for these fares between March and April vary notably year on year, with the timing of Easter a likely factor," it said.
The Bank of England forecast that Britain would dip into deflation in April, but Governor Mark Carney has consistently said that any period of negative inflation is likely to be temporary, and will not morph into the pernicious deflation seen in countries such as Japan.
He stressed last week that inflation was likely to climb “above 1pc” by the end of this year

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