Is the cost of living in Britain falling for the first time since 1960? We find out at 9.30am BST.Introduction: Lowest inflation rate since MacmillanQ&A: Negative inflationToday’s Greek denial: We’re not planning to default 8.38am BST We probably shouldn’t get too excited about inflation turning negative this morning.A majority of City economists surveyed by Reuters reckon the Consumer Prices Index will remain unchanged in an hour’s time, meaning inflation remained at 0.0% for the second month running.“I don’t think there will be deflation. The bigger picture is it is going to be close to zero for another two or three months. It is low inflation now – you might get a negative print, you might not, but it is not deflation.” 8.29am BST Today’s inflation data will include the impact of a recent 5% price cut by British Gas.That should bring utility bills lower, after years of inflation-busting price hikes helped to drive the cost of living up. 8.12am BST Denial ain’t just a river in Egypt, it’s also the Greek government’s standard response to most media reports these days.The government, which is rapidly running out of funds to pay public sector salaries and state pensions, has decided to withhold €2.5bn of payments due to the International Monetary Fund in May and June if no agreement is struck, they said.“We have come to the end of the road . . . If the Europeans won’t release bailout cash, there is no alternative [to a default],” one government official said.Greece denies reports in FT suggesting they are considering defaulting on debt if an agreement with its EU counterparts cannot be reachedIsn't Greece preparing for default if talks fail a bit like me deciding to get wet when getting caught in rain? http://t.co/1xC2mqaENd 8.03am BST Today’s inflation numbers will not improve the Bank of England’s track record on hitting (or missing) its goals.Since the financial crisis began, the CPI index has only enjoyed a passing relationship with the BoE’s 2% target, as this chart from last month shows: 7.55am BST Press Association have published a Q&A about the possibility of the UK inflation rate falling below zero today.Has this ever happened before? CPI has never turned negative since comparable records began in 1989. According to an experimental data series by the Office for National Statistics (ONS) going back to 1950 it was last negative, at minus 0.6%, in March 1960. Yes. CPI at minus 0.1% would mean a basket of goods worth 100 a year ago is now worth 99.90. Low inflation has been driven by falling petrol and grocery prices. Sustained falling prices could mean shoppers putting off purchases and firms delaying investment, while mortgages become less affordable, especially if wages drop. But this is thought unlikely, with temporary causes such as low oil prices likely to fade. Coalition politicians will hope added purchase power creates a feel-good factor as well as boosting consumer spending and lifting the economy. But the boost to growth might come too late to affect first quarter figures out a week before the poll. The Bank of England must try to return inflation towards its target of 2% so low CPI should mean rates at 0.5% for longer. Deeper or more prolonged negative inflation could create growing speculation of interest rates being cut even further. 7.46am BST Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.Is Britain experiencing its first bout of negative inflation since Harold Macmillan was running the country? We’ll find out at 9.30am BST today, when the Office for National Statistics reveals the latest consumer prices index.It is likely this will be a short-lived bout of deflation and the UK will returning to inflation later this year.“While food price deflation of close to 4% year on year may sound extreme, this represents something of a relief after years of rapid price increases.More specifically, over the seven years between 2007 and 2013, the average annual pace of increase in food price inflation was 5% per year. Enjoy the cheap food and fuel while it lasts!”UK economy poised to welcome deflation for first time since 1960 - by me http://t.co/CaTKeJhFPC Continue reading...
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