Inflation turned negative in the UK for the first time since the 1960s, according to the latest figures from the Office of National Statistics (ONS).
UK Consumer Prices Index (CPI) inflation fell to -0.1% in the year to April, with the downward push mostly from air and sea fares, which rose on the month, but by far less than a year ago, with the timing of Easter a likely factor.
This is the first time that the CPI measure of inflation has fallen negative since records for the statistic began in 1996. However, based on comparable historic estimates, the last time the UK saw consumer price deflation was in the year to March 1960, when prices fell by an estimated 0.6%.
The Bank of England has previously warned that inflation may become negative for a brief period this year, and Chancellor George Osborne has reiterated that the negative rate was temporary.
Deflation means that prices have fallen in real terms since the same time last year, meaning that people’s money is worth more. However, economists warn that deflation is generally considered a problem in modern economies as it also increase the real value of debt, which may aggravate recessions and lead to a deflationary spiral.