News / Economy

Depression looms large as inflation falls to zero

Tuesday, 24 March 2015 4:01 PM [ Last Update: Tuesday, 24 March 2015 4:15 PM ]

Inflation rate has fallen to zero for the first time on record in Britain.

A British economist says his country is facing a “huge depression” as the inflation falls to zero.

“These figures are the evidence that we are going into the latest phase of what is a huge 15 to 20 year depression. The process started in August 2007 when the gap between house prices and ordinary incomes got too large,” London-based Professor of economy Rodney Shakespeare told Press TV.

Earlier on Tuesday, the Office for National Statistics announced that Inflation has fallen to zero for the first time on record in Britain.

The consumer prices index dropped in February from 0.3% in January.

'Good news'

British authorities have described zero inflation as good news for family budgets.

“Prices are frozen and as the recovery from Labour’s Great Recession strengthens, their economic argument has literally come to nought.” Chancellor George Osborne wrote on his twitter page.

British Prime Minister David Cameron also hailed the inflation rate a “sign showing that the “long term plan is working”.

“Inflation is running at 0% - the lowest on record. It's good news for family budgets and a sign our long term plan is working,” Cameron noted.

However, some experts warn that the UK has been brought to the brink of a spell of deflation that is expected in the coming months.

Looming deflation

Back in February, the Bank of England published a report suggesting that Britain will slip into deflation for the first time in more than half a century amid declining oil prices in the global markets.

“Inflation is likely to fall further in the near term, and could temporarily turn negative,” said the report.

The report also noted that three quarters of the fall in inflation seen in 2014 was due to “unusually low contributions from energy, food and other goods prices”, and it expects such downward trends to continue into 2015.

According to the closest comparable data from the Office for National Statistics, the last time inflation was negative in Britain was March 1960.

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