Britain is expected to fall into deflation for the first time in more than 50 years because of falling food and fuel prices.
Analysts are predicting the Office for National Statistics will reveal tomorrow that prices fell in the 12 months to April, reports the Daily Mail.
Last week Bank of England governor Mark Carney said he expected inflation to “temporarily turn negative in the near term”.
Inflation has already fallen to 0% for the preceding two months. It was predicted deflation would occur in March, but inflation ended up remaining static at 0% for the second month running.
The supermarket price war is helping drive down inflation, which is calculated using the consumer prices index (CPI).
Inflation is at the lowest levels since the CPI began and financial modelling shows that Britain has not been at period of deflation since March 1960, the year Harold Macmillan was Prime Minister.
As a result of deflation, disposable incomes are expected to rise at the quickest rate since 2007.
Low levels of inflation are also expected to help keep interest rates down. Rates have been frozen at 0.5% since March 2009, while it is expected they will only rise to 0.75% this time next year.
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