The UK recorded negative inflation in April for the first time on record, but economists have said the figures constitute 'good deflation' and should boost consumer spending power.
Official figures showed that the Consumer Price Index (CPI), the UK's main measure of inflation, fell to -0.1% last month, driven down by the price of air and sea fares.
Negative inflation has the effect of driving down the price of consumer goods - a basket of goods which cost £100 last year now costs £99.90. However, sustained deflation can lead to falling demand as consumers hold off buying products in the expectation of continually falling prices.
This is the first time the UK has entered deflation since official records began in 1996 and the first time since 1960 based on historic estimates.
However, Ben Southwood, head of research at the Adam Smith Institute, said the negative figures should be embraced by consumers.
"We have deflation - albeit extremely mild deflation - for the first time since the 1960s. But this seems to be 'good deflation', coming mainly from cheaper goods - especially cheaper oil - rather than a drop in consumer demand," he said.
Southwood added that the Bank of England, which has set a target of 2% inflation, should remain vigilant against bad deflation.
Other developed economies have also experienced a period of 'good deflation' this year. German inflation figures fell to -0.4% in January, while France experienced negative inflation for the first three months of this year before posting a 0.1% positive rate in April. In the US, inflation currently stands at -0.1%, the same as in the UK.
Inflation has been driven down recently by the falling price of fuel and a race to the bottom between supermarkets concerning food prices.
In an accompanying release to the figures, the Office for National Statistics said that the main downward force was the price of air and sea fares. Last year, Easter fell in mid-April, coinciding with the timing of most foreign trips, but this year it was much earlier, meaning that fares rose by a slower rate.
"CPI inflation should return to positive territory in May, as the effect of the shifting timing of Easter ceases to depress it and as the negative contribution from energy and food prices starts to fade," said Samuel Tombs, senior UK economist at macroeconomic researchers Capital Economics.
However, Tombs said that the recent appreciation of sterling and recovering productivity means inflation may not meet the 2% target for another few years, meaning consumers could enjoy an extended period of increasing spending power.
Economists tend to differentiate between negative inflation, which is defined as a short-term fall in inflation which boosts consumer spending power, and deflation, which constitutes an extended period of falling prices, wages and output.
The CPI constitutes the price of an average basket of goods and services and was recently updated to include craft beer, e-cigarettes and protein powder.
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Conor is a staff writer for Newsweek covering Africa, with a focus on Nigeria, security and conflict.
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