Low inflation continues to support growth

  • Annual CPI inflation in February 2015 was 0.0%, a new historical low, down from 0.3% in January 2015
  • The main contributors to the fall in February came from recreational goods, food and furniture
  • Goods price inflation in February 2015 was -2.0%, while services inflation was 2.4%

Commenting on the CPI inflation figures for February, David Kern, Chief Economist at the British Chambers of Commerce said:

“These historically low figures reinforce our belief that inflation will fall into slightly negative territory in the coming months, before returning to a positive trend before the end of the year. However, we remain convinced that there is very little risk of a long period of deflation.

“Inflation in the service sector, which accounts for 80% of the UK economy, remains firmly above the government’s 2.0% target, and core CPI inflation in February was 1.2%. Together with higher earnings, lower inflation is boosting people’s spending power, and will contribute to economic growth in the year ahead.

“To sustain business confidence we need a firm commitment from the MPC to keep interest rates on hold until at least early 2016.”