Wednesday, April 22, 2009

UK Experiences First Deflation in a Half-Century


The UK's Retail Price Index (RPI), the nation's broadest measure of prices, fell into negative territory in March--the first deflation since March 1960. While prices were down overall, which would normally be sweet for consumers, several items purchased by older Brits rose in price.

Even though the cost of living for pensioners may have gone up--despite the slight drop in the overall level of prices--those living on retirement incomes may see the values of their checks frozen for now, since their checks are often indexed to the RPI for cost-of-living purposes. So seniors may be feeling a pinch.

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