UK inflation continues to fall
The Office for National Statistics has announced today that the Consumer Prices Index (CPI), fell to 2.3% in April from 2.9% in March.
The fall in CPI was much deeper than had been expected by economists as consumer demand continues to weaken amid the economic downturn.
In the meantime Retail Price Index (RPI), which includes mortgage costs, also fell to -1.2% in April from -0.4% the previous month – the lowest level since records began in 1948.
The fall in RPI was also larger than economists had predicted. RPI hit negative territory in March – the first negative reading since 1960.
RPI includes mortgage costs, which have fallen following aggressive cuts in interest rates by the Bank of England.
Colin Ellis, an economist at Daiwa Securities, told the BBC: “Underlying inflationary pressure is still extremely weak, and is likely to remain so, particularly given the rapid and ongoing deterioration in the labour market.”
While the CPI figure still exceeds the Government’s target of 2%, the Bank of England expects it to fall further during 2009.
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With deflation so high, we need to start pushing for a positive attitude to money. Unless we start spending, the situation is only going to get worse!