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Slowing inflation welcomed by economist

Slowing inflation welcomed by economist

Category: Loans

Updated: 23/01/2009
First Published: 23/01/2009

MONEYFACTS ARCHIVE
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News that the rate of inflation in the UK is slowing has been welcomed.

Geoffrey Wood, professor of economics at the Cass Business School, noted that inflation is a "very bad thing" and a return to target levels will be beneficial.

However, he added that the fact that it has taken an economic downturn to bring about a sharp reduction is a "pity".

The government's official measure of inflation - the consumer prices index - has slowed recently, dropping from 4.1 per cent in November to 3.1 per cent last month.

And with the Bank of England showing concern that this will lead to deflation, some secured loans have become cheaper as the base rate has been cut to offset the risk.

But Professor Wood remarked: "We shouldn't exaggerate the threat of deflation, after all we have had periods of deflation in the past [for] quite long periods sometimes and in general this is no great economic harm."

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