UK inflation remains at 0

Inflation in the UK has remained at zero per cent for March, according to figures from the Office for National Statistics (ONS).

It is the second month running that inflation has stayed at its record low and was a result of cheaper clothing and footwear, offset by a rise in petrol prices. The figure is the lowest rate of Consumer Prices Index (CPI) since the ONS began measuring inflation in the late 1980s.

The figures continued a trend that been steadily declining since February 2010. In the year to January 2015, the ONS had placed inflation of 0.3 per cent but this fell over the course of the following month. It means that a basket of goods that cost £100 in February 2014 would cost exactly the same a year later.

One of the driving forces behind the low inflation has been a fall in fuel prices in the last 12 months. With oil prices tumbling for over a year, it has had a knock-on effect in terms of petrol and diesel costs, providing a significant boost to motorists.

Rain Newton-Smith, director of economics at the Confederation of British Industry, said: "Zero inflation in March comes as no surprise, given the drop in commodity prices we have seen for some time now. Inflation should start to pick up in the second half of the year, especially as the downward pressure from lower oil prices eases."

Change in interest rates?

The continued low inflation could potentially prompt a change in the UK's interest rates. In March, when inflation fell to 0.3 per cent, the Bank of England was questioned whether it would cut interest rates to combat the move. However, governor Mark Carney described an approach of this kind to be "extremely foolish".

Mr Carney highlighted that falling oil prices were responsible for the drop in inflation and it would not be wise to cut interest rates at the current time.