Deflation, but not for long

The ‘negative inflation’ of 0.1% recorded in April by the Consumer Prices Index won’t last, says the Telegraph.

This was the first time since the 1960s that retail prices have actually fallen, but this owes a lot to the recent fall in food and energy prices. The Telegraph also points to a technical factor: Easter fell later this year, and that is when travel agents hike their prices, so this didn’t get into the index calculations for April 2015. That alone accounted for a drop of 0.1% in the index. Core inflation, though at a 14-year low, is still at 0.8%. And the Bank of England expects the CPI to be rising again by summer.

The Bank seems confident that inflation will be rising towards its 2% target by early 2016. And anyone planning investments for the longer term probably ought to assume that annual rate of inflation when judging if they’re getting an adequate return on their money.