UK inflation falls to zero for first time since 1934

London

INFLATION in the United Kingdom fell to zero in February, the first time in eighty one years.

Several economists forecast that the UK would slip into deflation. Indeed, the year 1934, when inflation was last zero, followed a lengthy period from 1921 to 1933 when Britain experienced falling prices. The big question is whether good inflation, ie falling oil and other raw material and consumer goods prices, could slip into bad deflation, notably a contracting economy, similarly to the Great Depression of the 1930s. There are currently no signs that this will happen. The UK's growth rate is 2.5 per cent and there has been vigorous asset price inflation, notably house and apartment price rises, though in the past few months, the appreciation has abated. Also, medical and other service costs have been rising.