The British economy sank deeper into deflation last month, falling to the lowest level in more than 60 years as the effect of falling house prices and lower mortgage repayments escalated.

Inflation on the Retail Prices Index measure, which includes housing costs, dropped sharply to –1.2% in the year to April from –0.4% in March, the Office for National Statistics said yesterday.

It was the lowest RPI figure since records began in 1948, and lower than economists had expected. Jonathan Loynes, at Capital Economics, said the inflation figures served as a reminder that “excessively low inflation, or deflation, is still a bigger risk over the next few years than a rapid rise in inflation”.

Financial Times