Consumer Price Index (CPI) inflation was 0.0% in March, prompting an open letter from the Governor of the Bank of England to the Chancellor of the Exchequer on 13 May 2015. The Chancellor replied to the Governor on 13 May 2015.
In line with the remit of the Monetary Policy Committee, the Governor must write to the Chancellor if CPI inflation moves more than one percentage point below the 2% target. The Chancellor and the Governor agreed that the underlying causes of below target inflation were falling food and energy prices.
Since issuing the letters, it has been announced on 19 May that the rate has now fallen to -0.1%. According to the Office for National Statistics, this is the first time CPI inflation has turned negative since 1960, based on comparable historic estimates.
For copies of the letters please click here.