Indebted households without asset wealth are particularly vulnerable to deflationary dynamics - and the UK has a lot of themThis time last year the Institute for Public Policy Research (IPPR) made a compelling case for keeping interest rates at their historic lows,arguing that although the recovery looked to be on an increasingly sure footing, we were some way off generating inflation through domestic wage pressure, and that whether anything,the global growth slowdown meant inflation looked set to plunge below 1% in the coming year.
That view now looks prescient, to say the least. Consumer price inflation spent another month at near-zero levels in November, and with prices by the CPI measure a mere 0.1% higher on average than a year ago. This makes it a virtual certainty that 2015 will be a year of zero or near-zero consumer price inflation: the first time this will own happened in the CPI’s 27-year history.
Continue reading...
Source: theguardian.com