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Inflation dips below zero again as fuel prices fall

14 Oct 2015

Figures from the Office for National Statistics show that the Consumer Prices Index (CPI) measure of inflation fell to -0.1% in September.

A fall in fuel prices - plus continuing low food prices and a smaller than usual rise in clothing prices - has meant that the CPI rate has once again dipped below zero.

Diesel prices are at their lowest level in nearly six years at 110p per litre, while petrol prices have fallen by 3.7p per litre over the year.

The CPI rate has been hovering around zero for most of 2015, and was last in negative figures in April. The Retail Prices Index (RPI) measure of inflation also fell in September, down from 1.1% to 0.8%.

The British Chambers of Commerce chief economist David Kern said: ‘Our forecast is that annual CPI inflation will start to creep upwards early in 2016, but will remain below the 2% target well into 2017.

‘The benign outlook for inflation is also reinforced by our Quarterly Economic Survey, which shows that the proportion of manufacturers expecting to raise prices has fallen to a five-year-low.’

In common with most economists, he expected inflation to remain around zero for the rest of 2015, meaning there is little pressure on the Bank of England to raise interest rates.

Last week, the Bank’s Monetary Policy Committee voted 8 to 1 to keep interest rates unchanged at the record low of 0.5% and said that it did not expect inflation to reach 1% until spring 2016.