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%.
Deflation expectation

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.


Analysis: Robert Peston, BBC economics editor

For now at least, the fall in the price of food, games, petrol and energy, if it persists for a few months, is good news for most of us - because it increases our spending power and our pounds go further.

In other words we feel and are a bit richer.

But if stagnation in prices were to go on for longer, if it were to turn into fully fledged deflation, that would be worrying.

The point is that if we thought that the price of things we don't normally have to buy at any particular moment - household goods like washing machines for example, or motor cars - was on a firmly downward path, we would probably defer purchases of those things, and that would depress economic activity. (BBC)