This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.
You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/8009718.stm
The article has changed 14 times. There is an RSS feed of changes available.
| Version 6 | Version 7 |
|---|---|
| Inflation measure turns negative | Inflation measure turns negative |
| (20 minutes later) | |
| UK annual inflation measured by the Retail Prices Index (RPI) went negative in March for the first time since 1960, to -0.4%, down from zero in February. | UK annual inflation measured by the Retail Prices Index (RPI) went negative in March for the first time since 1960, to -0.4%, down from zero in February. |
| RPI includes mortgage costs, which have fallen following the Bank of England's reductions in interest rates. | RPI includes mortgage costs, which have fallen following the Bank of England's reductions in interest rates. |
| The Consumer Prices Index (CPI), fell in March to 2.9% after February's unexpected rise to 3.2%, the Office for National Statistics (ONS) said. | The Consumer Prices Index (CPI), fell in March to 2.9% after February's unexpected rise to 3.2%, the Office for National Statistics (ONS) said. |
| The official CPI figure is still well above the government's target of 2%. | The official CPI figure is still well above the government's target of 2%. |
| The ONS said that the biggest downward pressure on inflation had come from energy prices as the price of oil was significantly below the level it had been in the same month last year. | The ONS said that the biggest downward pressure on inflation had come from energy prices as the price of oil was significantly below the level it had been in the same month last year. |
| Rob Pike, an economist at the ONS, said further reductions in energy prices would have an effect on April's figures. | Rob Pike, an economist at the ONS, said further reductions in energy prices would have an effect on April's figures. |
| "Clearly on the horizon there are downward pressures," he told the BBC. | "Clearly on the horizon there are downward pressures," he told the BBC. |
| Vegetable imports from Spain revived, sending vegetable prices lower, after being hit in the previous month by poor weather conditions. | Vegetable imports from Spain revived, sending vegetable prices lower, after being hit in the previous month by poor weather conditions. |
| Transport costs also fell as a result of lower fuel prices, which also fed into lower air fares. | Transport costs also fell as a result of lower fuel prices, which also fed into lower air fares. |
| Falling wages | Falling wages |
| Items in the ONS basket that were more expensive included the games, toys and hobbies category, with the price of computer games rising. | Items in the ONS basket that were more expensive included the games, toys and hobbies category, with the price of computer games rising. |
| Kevin Peachey, personal finance reporter, BBC News For those UK residents with a mortgage, the cost of living fell in March compared with a year earlier - but that does not give a complete picture of deflation. So who benefits? | Kevin Peachey, personal finance reporter, BBC News For those UK residents with a mortgage, the cost of living fell in March compared with a year earlier - but that does not give a complete picture of deflation. So who benefits? |
| Older people have just had a 5% rise in their basic state pension - so if prices rise by less than 5%, in theory they will be better off. | Older people have just had a 5% rise in their basic state pension - so if prices rise by less than 5%, in theory they will be better off. |
| However, many pensioners rely on the interest on savings to top-up their pensions and these returns have dropped sharply. | However, many pensioners rely on the interest on savings to top-up their pensions and these returns have dropped sharply. |
| One blow would be for workers' wages. If employers take RPI into account when deciding on any pay agreements, then a pay freeze is the likely result. The real value of their wage will arguably be higher though. class="" href="/1/hi/business/7960845.stm">What deflation means for you | |
| The price of clothing was also up from a year ago, with women's outerwear a particular driver. | The price of clothing was also up from a year ago, with women's outerwear a particular driver. |
| While the CPI is important as the rate that is targeted by the Bank of England's interest rate-setters, the RPI is used by many companies as the starting point for wage bargaining. | While the CPI is important as the rate that is targeted by the Bank of England's interest rate-setters, the RPI is used by many companies as the starting point for wage bargaining. |
| The RPI is also the figure that determines what happens to benefits and the basic state pension. | The RPI is also the figure that determines what happens to benefits and the basic state pension. |
| The figure used for pensions will be the one that comes out in September, although there is a minimum increase of 2.5%. | The figure used for pensions will be the one that comes out in September, although there is a minimum increase of 2.5%. |
| There are signs that inflation could fall further before then. | There are signs that inflation could fall further before then. |
| "We suspect that the weakness of retail spending and activity in general will bear down strongly on core inflation in time," said Jonathan Loynes at Capital Economics. | "We suspect that the weakness of retail spending and activity in general will bear down strongly on core inflation in time," said Jonathan Loynes at Capital Economics. |
| "UK inflation is still set to drop a lot further and the threat of a broader bout of deflation has not evaporated." | "UK inflation is still set to drop a lot further and the threat of a broader bout of deflation has not evaporated." |
| Michelle Mitchell, charity director of Help the Aged and Age Concern said: "Falling headline inflation masks the fact that that many older people's real rate of inflation remains far higher than the average. | Michelle Mitchell, charity director of Help the Aged and Age Concern said: "Falling headline inflation masks the fact that that many older people's real rate of inflation remains far higher than the average. |
| "With up to £5 billion of benefits going unclaimed by pensioners every year, we are strongly urging older people to ensure they are getting all the support they are entitled to." | "With up to £5 billion of benefits going unclaimed by pensioners every year, we are strongly urging older people to ensure they are getting all the support they are entitled to." |