The rate of inflation fell to a record low of 0.3 per cent in January, official figures revealed today.
Sharp declines in food and petrol prices saw the consumer prices index (CPI) measure of inflation fall from 0.5 per cent in December to its lowest level since records began in 1989, according to the Office for National Statistics (ONS).
However, according to an experimental model created by the ONS, last year, CPI was last lower in March 1960 when it was minus 0.6 per cent.
Bank of England forecasts suggest inflation will turn negative for the first time in five decades during the next few months before recovering later in 2015.
Howard Archer, chief UK economist at IHS Global Insight, said: “Consumer price inflation will highly likely retreat further in the near term and it could very well dip below 0 per cent given forthcoming energy tariff cuts by utilities, the ongoing downward pressure on food prices and still weak oil prices.”
Chancellor George Osborne said today’s figures were “great news for families, whose budgets will stretch even further”.
He added: “Although the low inflation is, as the Bank of England confirmed last week, driven by lower food and energy prices rather than damaging deflation, we will remain vigilant to all risk, particularly when the global economic situation is so uncertain.”