After a couple of months of teasing the rate of inflation fell below zero to -0.1 per cent in the year to April, thanks largely to the falling costs of good and transport, especially air fares (something that’s affected by when Easter falls). It’s the first time that CPI inflation has fallen below zero since records began in 1996, and the ONS estimates that it’s the first time the rate would have turned negative since 1960.
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Ignore the pointy-heads who say that terrifying deflation is now upon us. Inflation has been outstripping earnings growth for years – it’s great to see that process reversed. So far, this low-to-zero inflation has not seen consumers deferring purchases: they’re still spending. And surveys of consumer confidence show that people are getting more keen to make big purchases; the GfK index for people planning major purchases (below) shows confidence flooding back in as inflation falls.
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