UK INFLATION JUST HIT THE LOWEST LEVEL SINCE RECORDS BEGAN
That's the lowest figure for annual consumer price inflation since comparable records began.
The first estimate showed inflation at just 0.5%, the joint-lowest level on record.
The Bank of England now thinks it's "more likely than not" that the UK will fall into a brief period of deflation, when prices are actually falling overall, later in the Spring.
The plunge in oil prices has driven inflation down across the advanced world: The eurozone, where inflation was already low, plunged into deflation in December.
Even using historical data which isn't directly comparable, you have to go back to 1934 to find a full calendar year where inflation was lower than it is right now.
Despite the dangers of prolonged deflation, the Bank of England is quite relaxed about the situation, confident that the effect is fleeting and energy-price related. So far they're looking vindicated: Core inflation, which removes the effect of volatile items like energy and food, is up 1.4%.
Capital Economics' Paul Hollingsworth has taken a similar line:
inflation should fall further still over the coming months. Indeed, whilst only Eon's cut to gas prices came into effect in January, the other utility companies' price cuts should feed through between now and April. In addition, although we have probably seen the full impact of lower oil prices on petrol prices, we have almost certainly not seen the full effect trickle down to other goods. Accordingly, we still think that the UK will experience a brief period of deflation around March or April this year.
With little sign that low inflation is becoming entrenched, though, the UK's period of deflation should be of the "good" sort.