This month, Britain officially slipped into deflation with the publication of the retail price index for March. This index showed a decline in the price of a basket of goods measured by the RPI of 0.4%. This basket of goods includes housing, wages and consumer goods. Not since 1960 has the UK suffered from deflation. However, this figure doesn’t tell the whole story. The measures which the government use to reflect price increases are constantly changing. Currently, food and energy costs are not included in this index but are included in the core inflation reading.
By the core measure of inflation, prices rose at an accelerated rate compared to February. In February, core inflation was running at 1.6% per annum while in March this rate increase to 1.7%.
