What's going on?

Inflation rates in the UK fell to a record low of 0% in February, down from .3% in January and below economists expectations of .1%. The drop is due to lower than expected oil prices. 0% inflation is good news for British consumers and the British economy since it spurs consumer spending.

What does this mean?

The drop in inflation is caused by lower than expected worldwide oil prices, which have hit record low prices this year. Lower costs in food, transport and non-alcoholic beverages are also keeping inflation rates near zero. The result of the low inflation is that consumer spending is increasing as prices are lower in stores. The Bank of England, which has been keeping interest rates at .5%, will take the new 0% inflation rate into consideration about whether the UK economy is ready for slightly increased interest rates.  

Why should I care?

Near zero inflation rates are good news for British consumers, increasing consumer spending and spurring economic growth at a time when wage growth remains weak. One impact of near zero inflation could be that it increases consumer spending so much that producers raise prices. Another result could be that the pound sterling, which has been rising as a repercussion of low inflation rates, could make imports cheaper. An investment opportunity would be to buy the pound sterling on currency trading exchanges, as the inflation rate is expected to stay low for the next few months, driving up the currency. This would be an opportunity to buy since the pound has already risen 3% this year and may continue to do so. Another investment opportunity would be in British oil stocks, which are very low at the moment due to the low price of oil. If the price of oil does rise in the next year those stocks will probably rise as well.