Why deflation forecasts were wrong

Link to the article: Channel 4

Last Modified: 24 Mar 2009
By: Channel 4 News

Inflation measures defied predictions by economists by rising in February. Channel 4 News online explains why the experts missed the mark.

Q: What inflation figures were released today?
A: Two sets of figures were published by the Office of National Statistics today: the Consumer Prices Index (CPI) and the Retail Prices Index (RPI).

The CPI - which the government uses as its inflation target guide - is a measure of the average price of consumer goods and services purchased by households. It rose from 3 per cent in January, to 3.2 per cent last month.

The RPI, used by government for the rating of pensions, benefits and wages, slowed to zero in February, from 0.1 per cent last month.