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Inflation falls below zero

Sarah Davidson

October 13, 2015

Richard Campbell, statistician at the Office for National Statistics, said that clothing and falling fuel prices were the main contributors to the downward pressure on the CPI.

Vicky Redwood, chief UK economist at Capital Economics, warned inflation could stay negative for another month or two but is still likely to rebound at the turn of the year when the previous bigger falls in energy prices drop out of the annual comparison.

She added: “We still think that the risks of a more serious period of deflation are low.

“Nonetheless, inflation will take a long time to get back to its target; as the Monetary Policy Committee conceded in its latest minutes, it will take until the spring even to get back to 1%.

“Accordingly, these figures mean that there is still very little pressure on the MPC to raise interest rates.”


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