The UK consumer prices index inflation rate sank to 0 per cent in August, and economists predict it could move back into negative territory before the end of the year.
The rate fell from 0.1 per cent in July, in line with economists’ predictions.
The Office for National Statistics said: “A smaller rise in clothing prices on the month compared with a year ago was the main contributor to the slight fall in the rate.
“There were also downward effects from changes in motor fuel prices and sea fares.”
The ONS added: “Rising prices for soft drinks and for furniture and furnishings partially offset the fall.”
The core inflation rate, which strips out factors like energy and food prices, fell from 1.2 per cent to 1 per cent.
Economists predict inflation could drop back into negative territory before the end of the year. Vicky Redwood, chief UK economist at Capital Economics said: “The British Gas price cut will show up in the next set of figures and the fall in agricultural commodity prices could push down food price inflation.”
However, she added CPI inflation “should nonetheless rebound at the turn of the year”.
CPI inflation was last negative in April, when the index shrunk 0.1 per cent year on year.
