Belfast Telegraph

Inflation stays negative for second month in a row

By Holly Williams

Inflation remained in negative territory last month, marking the longest run of flat or falling prices since records began.

The Office for National Statistics said the Consumer Prices Index (CPI) was unchanged at -0.1% in October as households continued to benefit from lower food and drink prices amid a supermarket price war, as well as falling energy and fuel costs.

October's rate of inflation means the UK has now been in mild deflation for two months in a row, while CPI also briefly dipped into negative territory in April.

Inflation has been at or close to zero for nine months and is at the lowest level since March 1960.

Low inflation eases pressure on the Bank of England to increase interest rates, as CPI has now been significantly below its 2% target for nearly a year.

The bank's latest forecast signalled that a hike in the cost of borrowing may not come for at least a year despite governor Mark Carney previously saying the decision would come into "sharper relief'' at the turn of the year.

Mr Carney said CPI was unlikely to stay close to zero "much beyond the end of the year", but the bank forecast that inflation was set to stay below 1% until the second half of 2016.

Belfast Telegraph