Cebr Executive Chairman Douglas McWilliams first anticipated negative inflation  back in November, in the event of oil prices dropping below $60 per barrel – something which has now been borne out in reality.

 

Retail price wars, falling petrol prices and reductions in utility bills will contribute to a bout of “good deflation” which will help support household incomes and drive a consumer-led recovery in 2015.

 

Scott Corfe, Head of UK Macroeconomics at Cebr, says, “a short run of negative inflation numbers could actually be quite good for the UK economy, as prices of essentials fall and households have more to spend on discretionary goods and services”.

 

“With so many disinflationary pressures, the Bank of England won’t raise interest rates until November 2015 at the very earliest”.