Latest RPI figures in line with expectations at 0%
The Retail Prices Index (RPI) - a key measure of UK inflation - has fallen to zero for the first time in 49 years, according to figures from the Office for National Statistics.
The RPI fell to 0% in February, down from 0.1% in January. This has led to concerns that the UK could be on the brink of a prolonged period of deflation as customers hold back on spending as they wait for prices to decrease further.
The decline in RPI is largely due to the fall in mortgage repayments, a series of interest rate cuts and lower gas and electricity charges. The government uses the broader measure of RPI to set the level of state pensions, welfare benefits and index-linked government bonds.
However, The Consumer Prices Index (CPI), which is used in economic policy, rose unexpectedly from 3% to 3.2%.
Post Date: March 24th, 2009