Britain hit by deflation for first time in almost 50 years!
LONDON, England - March 22, 2009 – Britain will be entering an era of deflation this week with the retail prices index (RPI) recording its first 12-month fall since 1960.
Analysts say the index will show a drop because of falling house prices, mortgage rate cuts and lower energy prices.
Not everyone will experience falling prices. The consumer prices index (CPI), which is the government’s preferred measure, will remain above zero for now and groups such as pensioners will continue to face higher prices than a year ago because they pay less of their income in property costs.
The period of falling prices measured by the RPI, expected to last a year, will produce a boost for some graduates with student loans. About 350,000 students who took out loans before 1998 will receive a bonus from September. Their interest rate is linked to inflation measured by the RPI.
