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%.
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