The Consumer Price Index fell by 1.2 points in January, the sixth consecutive fall, and the interannual rate fell by sith tenths to 0.8%, the lowest figure since June 1969.
Lower prices for fuel, food, fresh milk and oils have seen inflation fall to far below the level predicted by the Government. Official expectations were an inflation rate of 2% at the end of 2008 with a further decine in 2009. The core rate of inflation, which excludes fuel and unprocessed food, is now down to 2%.
While a very low rate of inflation is good, care has to be taken that it doesn’t slip into negative figures and become deflation.