UK dodges deflation… but only for now, says economist

UK inflation remained at 0 per cent last month but the measure for core inflation decreased to a nine-year low, according to the latest data from the Office for National Statistics. 

CPI stayed at 0 per cent in March following the surprise drop in February from 0.3 per cent. 

However, core inflation – a measure of inflation that excludes certain items that face volatile price movements – was dragged lower by clothing and footwear prices to 1 per cent, from 1.2 per cent in February and 1.4 per cent in January.

IHS Global Insight chief UK and European economist Howard Archer says: “With modest deflation still likely to occur over the next couple of months and inflation likely to remain very low for a prolonged period… consumers should see appreciable improvement in their purchasing power over the coming months.”

However, Archer believes the chance of prolonged deflation is still unlikely in the UK.