Britain’s annual rate of consumer price inflation fell below zero for the first time in more than half a century, official figures showed on Tuesday, though Bank of England Governor Mark Carney said the dip was likely to be brief.
British finance minister George Osborne also said the drop did not amount to “damaging deflation”, referring to a spiral of falling prices that hurt the economy.
The Office for National Statistics said consumer prices fell 0.1 percent in April compared with the same month last year. Economists taking part in a Reuters poll had expected the consumer price index to remain unchanged.
It was the first time annual CPI had fallen since official records began in 1996. Based on comparable estimates going back further, it was the first time that consumer prices had declined since 1960, the ONS said.
Sterling fell by one and a half cents to a one-week low against the dollar and British government bond futures hit a session high after the data.
Carney was keen to stress that the decline was caused by last year’s big one-off fall in energy prices — not weak domestic demand — and that Britons should enjoy the reduction in their cost of living before inflation picked up.
