UK inflation turns negative

The Office for National Statistics (ONS) said Tuesday that consumer prices were 0.1 percent lower in April, compared with the same month a year earlier. In the year to March, prices were flat.

According to the statistics agency, this is the first time the CPI has fallen over the year since official records began in 1996 and the first time since 1960 based on comparable historic estimates.

The biggest downward contribution in April came from transport services - notably air and sea fares.

A sustained period of falling prices - or deflation - is a concern as it can weigh on economic activity, if consumers put off spending and businesses fail to invest.

Most economists, however, expect inflation to rise soon as the effect of last year's oil and food price falls fades.

No inflation pressures

Finance Minister George Osborne said in a statement that Britain was not facing "damaging deflation."

Britons should welcome the lower cost of living driven by a fall in oil prices since last year, he added, stressing that "we have to remain vigilant to deflationary risks and our system is well equipped to deal with them should they arise."

Inflationary pressures are currently largely absent worldwide, with both the eurozone and the US witnessing inflation rates close to zero.

sri/hg (AP, ONS)