UK inflation down to 0.3%
The Consumer Prices Index (CPI) stood at 0.3% in the year to January 2015, down from 0.5% in December. According to the Office for National Statistics, falling prices for motor fuels and food were the main contributors to the slowdown in the rate of inflation, which is well below the Government’s target of 2%.
In the year to January, food prices fell by 2.8% and the cost of motor fuels fell by 16.2% – in total these two groups have reduced the CPI 12-month rate by around 0.9%.
The Bank of England has warned that the UK could experience a period of deflation but continues to be optimistic that the UK will not experience a damaging deflationary cycle, the like of which currently threatens the Eurozone.