The Consumer Prices Index measure of inflation remained at 0 per cent at March, for the second month running, data from the Offices of National Statistics revealed.
The Office of National Statistics announced today (14 April) that falls in clothing and gas prices produced the largest downward contributions to change in the inflation rate.
However, these were offset by an increase in the price of motor fuels and smaller upward contributions from a variety of other products such as food.
This leaves inflation well below the Bank of England’s 2 per cent target.
Ben Brettell, Hargreaves Lansdown’s senior economist, pointed out that at least the latest figures avoided the speculated fall into deflation.
He also noted that ‘core’ inflation, which excludes volatile food and energy prices, fell to a nine-year low of 1 per cent, undershooting economists’ forecasts of 1.2 per cent.
Mr Brettell said: “The trend for core inflation has been downwards, indicating that underlying inflationary pressure in the economy remains weak.
“The headline inflation rate is almost certain to rebound once the effect of lower fuel and food prices falls out of the year-on-year calculations, but weak core inflation should mean the Bank of England is able to leave interest rates on hold for some time yet - I can’t see them rising before mid-2016.”
Maike Currie, associate investment director at Fidelity Personal Investing, said Britain has been hovering in the parking bay of ‘deflation station’ for some time now.
She said: “Today’s figure will help abate concerns that the country has fallen into a 1930s-style deflationary spiral, however, it is important to recognise the drivers behind this persistent fall in prices: a plummet in our grocery prices as a result of the ongoing discount battle between supermarkets, the staggering collapse in the oil price and a stabilisation in our utility bills.”