Deflation is generally considered undesirable because people may stop spending as they wait for prices to go down further. This leads to a deflationary spiral, where prices and demand continue to fall and economic growth contracts.
This happened in Japan in the Nineties, when it experienced what it now known as its "lost decade".
There is also the concern of the cost of mortgage payments staying the same while other prices fall, effectively leading to an increased debt burden.
Economists surveyed by the UK Treasury expect retail prices to be falling by an annual rate of 1.9% by the end of the year.
The Bank of England said this month that periods of deflation would be "short-lived" if decisive action was taken using "more unconventional" monetary policy tools, such as so-called quantitative easing.
The Bank has slashed interest rates and has effectively increased the amount of money in the economy by Â£75bn in a bid to boost economic activity, which can cause prices to rise.
Many annuities - a regular income from a retiree's pension pot - are also based on the yields made from government bonds or are linked directly to retail prices.
Regulated train fares, which account for 40% of all tickets sold, are also pegged to retail prices, with fares capped at 1% above retail price inflation, but the train companies are now arguing that formula was never designed for a period of deflation.
Regulated fares include season tickets and off-peak fares. Public sector unions also often refer to the RPI measure of inflation during wage negotiations.
These inflation figures will be the first using new items in the 650-strong basket of goods, which is updated every year.
The ONS announced on Monday that it has included such products as rotisserie chicken and rose wine, an indicator of the UK's changing spending habits.
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