Deflation should be briefer in the UK than overseas

With E.On’s cut in gas prices probably kicking off a more widespread round of utility price cuts and oil prices falling even further last week, a brief dip into outright deflation now seems more likely than not.

However, deflation in the UK will probably be rather milder, and last a shorter period, than the deflation we are likely to see in other developed economies. The UK is also one of the countries where deflation is most likely to be a “good” thing.