Tuesday, April 21, 2009
First negative RPI inflation since 1960
Posted by David Smith at 10:00 AM
Category: Thoughts and responses

We expected it a month earlier but it has now arrived. The retail prices index last month was down by 0.4% on a year earlier, the first "deflation" on this measure since 1960. The Bank of England will also be relieved that consumer price inflation, down from 3.2% to 2.9%, has dropped out of letter-writing territory.

It is still above the 2% target, though is set to fall significantly in the coming months. The government will be wishing it had stuck to RPIX (the retail prices index excluding mortgage interest payments), which dropped from 2.5% (its old target) to 2.2%. More details here on the inflation numbers, suggesting price pressures in food and energy have eased but that there is some pass-through from sterling's decline on prices of some goods.