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RPI inflation turns negative

Britain’s retail price index (RPI) inflation fell to a negative 0.4% in March on an annual basis, the first fall in retail prices since 1960.

Down from 0.0% in February, the figure indicates deflation has returned to the British economy despite quantitative easing measures by the government, which have an inflationary effect.

However, consumer price index (CPI) inflation, the government’s target measure, was 2.9% in March, measured against the previous year, after standing at 3.2% in February.

The Office of National Statistics said the largest downward pressure on prices came from housing and household services, particularly falling gas and oil bills as last year’s high oil prices affected year-on-year figures.

Food and non-alcoholic beverages also fell in price, in particular vegetables, while transport costs also fell. However, recreation and culture prices rose.

In addition the RPI was affected by falling prices for housing, including house depreciation, falling mortgage interest payments and buildings insurance, figures not included in the CPI.

CPI inflation remained within the government’s target range of one percentage point above or below 2%.

Related Articles:
Standard Life predicts deflation


Seeing red

Is the FSA’s aim to get rid of independent financial advisers? When you consider the sheer weight of regulation imposed on IFAs, it is enough to make you think that the FSA is out to get us. Just consider some of the main proposals – the retail distribution review, treating customers fairly and the latest proposals for capital adequacy.


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