UK inflation turns negative

London

British inflation sank into negative territory last month for the first time in more than half a century, official data showed yesterday, sparking fears of deflation or prolonged falling prices.

The rate hit minus 0.1 per cent in April, the Office for National Statistics (ONS) said in a statement, risking a period of damaging deflation for Britain's economy.

That was the lowest rate on record -- since the data series began in 1996 -- and comes after two previous months of zero inflation.

The ONS added that it was the first time that inflation has turned negative since 1960, citing comparable historic estimates. An experimental data series created by the ONS indicated that CPI was last negative in March 1960, when it stood at minus 0.6pc.

The Consumer Prices Index (CPI) fell by 0.1pc in the year to April compared with no change in the 12 months to March, the ONS added.

Prices were pushed into negative territory on the back of falling transport services -- notably air and sea fares -- and the earlier timing of Easter.

Inflation has been dragged lower in recent months by slumping world oil prices and supermarket price wars in Britain.

However, Tuesday's data also showed a sharp drop in "core" inflation -- which excludes the volatile elements like energy, food, alcohol and tobacco.

Core inflation grew by just 0.8pc, which was the lowest level since March 2001.