Gifts Today magazine

Britain faces first deflation since 1960

Competitive supermarket pricing of essentials is helping drive down inflation into negative in over 50 years.

The heated supermarket price wars, which has seen food and fuel prices consistently driven down, could push Britain into deflation for the first time in more than 50 years, Retail Week reports.

Inflation hit 0% earlier this year, remaining at that level throughout February and March despite predictions that deflation would occur in the third month of 2015. Supermarkets' bid to outdo each other on low pricing is currently a major contributing factor in driving down inflation, which is calculated using the consumer prices index.

Financial modelling shows that March 1960 was the last period of deflation for Britain. The result of the forecasted deflation this year would see disposable incomes rise at the quickest rate since 2007.


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