CPI inflation rate falls to 0 per cent

James Sproule
James Sproule, chief economist at the IoD

Inflation as measured by the Consumer Prices Index (CPI) fell back to 0 per cent in June, according to the Office for National Statistics.

Disinflationary pressure from falling energy and food prices saw the inflation rate fall from 0.1 per cent in May to 0 per cent in June, bringing the UK close to re-entering deflation, as measured for the first time ever in April.

The rate of Retail Price Index (RPI) inflation remained unchanged at 1 per cent.

The Bank of England predicts that inflation will pick up around the end of the year, but expects that it will remain low in the short-term.

The Institute of Directors (IoD) said the low rate of inflation was a boost to businesses and households.

James Sproule, chief economist and director of policy at the IoD, said: “Businesses and households will cheer another month of low inflation, which is delivering an unexpected boost to millions of businesses and consumers.

“The lower cost of essentials, such as transport, has given companies more money to invest, take on staff, pay down debts, increase wages or reduce prices.

“At the same time, lower household food and petrol bills are feeding through to higher disposable incomes, increasing consumer confidence and demand.”

Share icon
Share this article: