Inflation falls back to zero

INFLATION is still expected to tick higher later this year despite slipping back to zero last month amid a round of womenswear summer sales and as a run of falling food prices reached its longest stretch for 15 years.

The Bank of England expects a CPI improvement later this year. Picture: PA

Official figures yesterday showed the consumer price index (CPI) measure of inflation slipped back from 0.1 per cent in May, in line with City expectations.

CPI has been hovering around zero since February, providing an extra boost to households as wage increases accelerate.

The Bank of England expects CPI – which fell below zero in April for the first time in more than 50 years – to turn higher later this year as the effect of falling oil and food prices fades.

Howard Archer, chief UK and European economist at IHS Global Insight, said: “We believe it is most likely that consumer price inflation will hover around zero through the summer and then start heading gradually but decisively up from September.”

Rob Harbron, managing economist at the Centre for Economics and Business Research (CEBR), said: “Although there are no significant inflationary pressures on the horizon, CEBR expects consumer price inflation to begin rising slowly again in the next few months.”