UK inflation turns negative

Headline CPI figure of -0.1% is first negative inflation figure since 1960 fuelled by lower air fares and ferry ticket prices

Inflation in Britain has turned negative for the first time in more than half a century, giving a boost to household finances and bolstering expectations that interest rates will remain at a record low for the rest of this year.

Related: Is this deflation or negative inflation? Q&A

Related: Is the UK in the early stages of deflation?

Today we see good news for family budgets with prices lower than they were a year ago. As the governor of the Bank of England said only last week, we should not mistake this for damaging deflation.

Instead we should welcome the positive effects that lower food and energy prices bring for households at a time when wages are rising strongly, unemployment is falling and the economy is growing. Of course, we have to remain vigilant to deflationary risks and our system is well equipped to deal with them should they arise.

Any relief for households is welcome, but this month's figures reflect global trends and doesn't change the reality that many are still struggling to pay the bills.

The Government must clearly guard against the risk that business investment might be deferred. We need stronger action now to raise productivity to deliver sustainable growth and rising living standards.

The first period of negative inflation in over half a century could turn out to be the canary in the mine, signalling that there's something very wrong with the recovery. And with the threat of deflation set to continue, the Chancellor's plans for extreme cuts risk putting the economy into more serious trouble.

We expect inflation to be very low over the next few months. But over the course of the year, as we get towards the end, inflation should start to pick up towards our 2 percent target."

Enjoy it while it lasts because there is a good chance that inflation will be back in positive territory next month. The emphasis is largely symbolic and it shouldn't have come as a surprise to most people.

Falling prices raise consumer spending power and help keep interest rates low. This looks like the mild and benign variety of deflation which is good news for consumers and for growth.