LONDON — The Bank of England expects consumer prices this year to continue to fall, with the possibility of inflation dipping into negative territory, the central bank said Thursday morning.
Inflation will decline to 0 percent in the second quarter of 2015, and it will most likely dip below zero briefly in the second half of the year, after an anemic 0.5 percent rise in December, the central bank said in its quarterly inflation report. It expects prices to rise slowly, or 0.46 percent in the fourth quarter.
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“The most important single reason for below-target inflation over the past year is the unexpected and sharp drop in energy prices,” the letter said.
Economic projections are notoriously volatile, however, subject to assumptions about often-unforeseeable events. For example, few people saw oil prices dropping as quickly as they did.
