Driving Hastings forward 01424 205481

The UK inflation rate stayed at 0.3% in February, the same as January.

The Office for National Statistics (ONS) said that the rising food prices, in particular vegetables, helped to keep the Consumer Prices Index unchanged.

Last year inflation reached zero and the annual inflation has continued to be below the Bank of England’s 2% target for the past two years. The Bank expected inflation to stay below 1% this year.

Under the separate Retail Prices Index (RPI) measure, inflation was 1.3% in February, which also showed no change from the previous month. The measure includes housing costs.

The ONS reported that government borrowing fell less than expected in February at £7.1 billion. Chancellor George Osborne is close to missing his target for cutting the budget deficit in the 2015-16 financial year. The total deficit now stands at £70.7 billion for the 11 months of the year. The chancellor’s full-year target is £72.2 billion.

Last month the annual rate of house price growth fell to a two-year low, stated the Nationwide building society. In June, annual house price inflation fell to 3.3%, compared to 4.6% in the previous month. This is much lower than two years ago, when prices were rising by 11.8%.

The average cost of UK property now stands at £195,055 because between May and June, prices across the UK actually fell by 0.2%. House prices in Wales and Scotland however, have fallen over the last year.

Howard Archer, who is the chief UK and European economist at IHS Global Insight, said that he still expects that house prices will rise by 6% this year and 5% the following year. Northern Ireland has the fastest growth, as he region saw its prices rise by 8% over the year. London house prices rose by 7.3% and in Scotland, prices fell by 1% compared to one year ago. In Wales, prices were down by 0.8%.

The cost of living dropped to -0.1%, as measured by the Consumer Prices Index (CPI) stated the Office for National Statistics (ONS).

Deflation is when the cost of living becomes cheaper over time because of falling prices.

Since the official records began in 1996, it is the first time that inflation has turned negative. It also estimated that deflation has not been seen in Britain since 1960. This is good news for consumers who have suffered from years of stagnant wages since the economic crisis took hold. This means that spending power is greater as products fall in price.

On the flip side, this can be bad news for the economy if deflation continues for a long period of time because it encourages consumers and businesses to delay purchases as they hope for a better price later on. This could lead to shrinking output and therefore, cause the economy to contract. However experts said that deflation featured in April mostly because of the timing of Easter this year compared to the previous and therefore, is likely to be for one month only.

The drop in the price of oil as well as supermarket price wars has been the main cause of falling prices in the UK. Food prices fell by 3% in the year to April 2015 and prices of motor fuels dropped by 12.3%. In recent weeks the cost of oil has started to rebound and global food prices are becoming steadier, according to Capital Economics.

Between March and April 2015, the cost of petrol and diesel increased by 1.6%.