Monetary Policy

Zero inflation will make Britons better off


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The IEA responds to the latest inflation figures

Commenting on the latest inflation figures, Prof Philip Booth, Editorial and Programme Director at the Institute of Economic Affairs, said:

“The main reason for low inflation is the reversal of the commodity price boom which cannot continue indefinitely. Zero inflation is caused by falling oil and food prices and is unalloyed good news. Business costs are stable, people’s incomes are going further and standards of living are improving.

“Even sustained moderate deflation would not be a problem for the UK economy, and the Bank of England should guard against any knee-jerk reaction involving lower interest rates. The kind of deflation which we are enjoying at the moment is, to a large degree, simply a reversal of the trends that reduced living standards in the period 2008-2011. It is to be wholly welcomed.”


Notes to editors:

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The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.

The IEA is a registered educational charity and independent of all political parties.



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