RPI inflation `to go negative for first time in 50 years`

City economists have predicted that February`s RPI (Retail Prices Index) measure of inflation will show a fall into negative territory for the first time since 1960.

Ahead of the Office for National Statistics inflation report, to be released tomorrow, economists have predicted that RPI inflation will have fallen from 0.1% in January to between -0.6% and -0.8% in February.

RPI inflation is not the Government`s `headline` rate of inflation, upon which major economic decisions are based, but it can influence the pricing of goods and services, as well as salary reviews within businesses.

Negative RPI inflation could therefore mean that many workers do not get a pay rise this year, and many companies could even be under pressure to make salary cuts.

A spokesperson for debt management company Gregory Pennington said: "It now looks almost certain that the economy will enter a period of deflation in the near future, but many people may argue that their costs are still rising.

"For example, RPI takes housing costs into account - so many people who aren`t paying a variable-rate mortgage may still experience a rise in their own costs.

"We advise people to take extra care of their finances and try to clear any debts, since the coming months could prove to be difficult for many households."

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