Deflation Still Looms for UK

The Office for National Statistics has released data that shows deflation is still a risk for the UK.  The charts show that both the Consumer Prices Index and the Retail Prices Index fell in April  – meaning annual inflation dropped further.

Economists have reacted by saying that there is a higher risk of deflation than a “rapid rise in inflation” – as inflation currently still stands above the 2 per cent target set by the Government.

The main areas being blamed for the rate falls are the lowering food and fuel prices, but also being factored in are lower home insurance prices and mortgage interest payments.

In general, there has been a slow return to confidence in world markets, and today the US even claim their recession will be over by the third quarter.  Indeed, it has been said there is an element of ‘first in, first out’ to this global crisis.  Risk appetites are certainly beginning to show a return to recovery on the currency market, as those ‘safe’ currencies begin to weaken in favour of more risky ones for investors.

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