According to one sector commentator, inflation is healthy because it creates wealth.
However, Darren Cook, spokesperson for Moneyfacts, said that once there was deflation during a recession, it was not good for the economy as people postponed big payments in order to wait for prices to come down, which had a negative impact on industries such as manufacturing.
"The danger as we go forward, during the recession that [inflation goes] down below the two per cent and even going down below the zero to a deflation situation, which is no good for the economy," he added.
But Mr Cook added that inflation declining was a good thing for the consumer, particularly now fuel prices had come down.
It has been widely reported today (December 23rd) that the Office for National Statistics has revealed that gross domestic product between July and September 2008 was at 0.6 per cent - the biggest fall in almost 18 years.
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