<p>Deflation was in UK in April 2015 and September 2015. Both of the times it was just 0.1% which is not really considerable.</p>
<p>Following the <a href="https://www.bankofengland.co.uk/-/media/boe/files/inflation-report/2015/november-2015.pdf#page=32" rel="nofollow noreferrer">Bank of England</a> (UK central bank that also does research on inflation) as well as analysis of economists from various private banks (see <a href="https://www.theguardian.com/business/2015/jan/13/uk-inflation-drops-to-14-year-low-what-the-economists-say" rel="nofollow noreferrer">this</a> Guardian interview), the main reason for this was positive supply shock, namely:</p>
<blockquote>
<p>The current low level of inflation can largely be accounted
for by lower energy, food and other imported goods prices, although it also reflects muted domestic cost growth.</p>
</blockquote>
<p>This has little to do with brexit, in fact it was rather in spite of brexit. Energy prices are effectively set at world markets, UK is not big energy producer, in fact as the report mentions that energy was imported (brexit if anything makes imports from EU more expensive). Food prices are very sensitive to energy as well and this further contributed to that. Also value of foreign currencies does not really affect domestic inflation unless there is a peg in place, like for example when Danish Krona is pegged to Euro.</p>

CC BY-SA 4.0
2023-01-31T05:07:01.160Z
Right, it seems that "deflation" was the wrong word choice. I meant that huge gap around 2015, about 3 years with less than 2% inflation (which wasn't common in the whole 62 years record), and about 2 years with less than 1% inflation (only repeated with Covid). Would you say the reasons are the same you already cited, or something else?
Rodrigo
CC BY-SA 4.0
2023-01-31T08:26:21.743Z
@Rodrigo yes the reasons are the same, as the quote in the report says this was the reason for low inflation.
1muflon1
CC BY-SA 4.0
2023-01-30T22:22:08.003Z
2023-01-30T22:22:08.003Z
1muflon1
<p>According to the graph <a href="https://en.wikipedia.org/wiki/Pound_sterling#1976_sterling_crisis" rel="nofollow noreferrer">here</a> (copied below), there was a considerable deflation in UK around 2015. I thought it may have something to do with the Brexit discussions (or even Grexit, the Greek equivalent), or maybe the US dollar rise around the same time (<a href="https://economics.stackexchange.com/questions/15329/why-was-there-a-sudden-rise-in-trade-weighted-us-dollar-value-in-2014-2015">see here</a>). Can someone please explain what are the exact/most probable causes?</p>
<p><a href="https://i.sstatic.net/JGRpB.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/JGRpB.png" alt="enter image description here" /></a></p>

<deflation><uk>
Why was there a deflation in UK around 2015?
Rodrigo
# Why was there a deflation in UK around 2015?

(Asked by: username_0 on 2023-01-30)

According to the graph [here](https://en.wikipedia.org/wiki/Pound_sterling#1976_sterling_crisis) (copied below), there was a considerable deflation in UK around 2015. I thought it may have something to do with the Brexit discussions (or even Grexit, the Greek equivalent), or maybe the US dollar rise around the same time ([see here](https://economics.stackexchange.com/questions/15329/why-was-there-a-sudden-rise-in-trade-weighted-us-dollar-value-in-2014-2015)). Can someone please explain what are the exact/most probable causes?

[![enter image description here](https://i.sstatic.net/JGRpB.png)](https://i.sstatic.net/JGRpB.png)

**Tags:** deflation, uk


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## 1 answers

### Answer by username_1 on 2023-01-30. Score: 1 | Accepted answer

Deflation was in UK in April 2015 and September 2015. Both of the times it was just 0.1% which is not really considerable.

Following the [Bank of England](https://www.bankofengland.co.uk/-/media/boe/files/inflation-report/2015/november-2015.pdf#page=32) (UK central bank that also does research on inflation) as well as analysis of economists from various private banks (see [this](https://www.theguardian.com/business/2015/jan/13/uk-inflation-drops-to-14-year-low-what-the-economists-say) Guardian interview), the main reason for this was positive supply shock, namely:

> The current low level of inflation can largely be accounted
> for by lower energy, food and other imported goods prices, although it also reflects muted domestic cost growth.

This has little to do with brexit, in fact it was rather in spite of brexit. Energy prices are effectively set at world markets, UK is not big energy producer, in fact as the report mentions that energy was imported (brexit if anything makes imports from EU more expensive). Food prices are very sensitive to energy as well and this further contributed to that. Also value of foreign currencies does not really affect domestic inflation unless there is a peg in place, like for example when Danish Krona is pegged to Euro.

> **Comments:**
> **username_0**: Right, it seems that "deflation" was the wrong word choice. I meant that huge gap around 2015, about 3 years with less than 2% inflation (which wasn't common in the whole 62 years record), and about 2 years with less than 1% inflation (only repeated with Covid). Would you say the reasons are the same you already cited, or something else?  
> **username_1**: @username_0 yes the reasons are the same, as the quote in the report says this was the reason for low inflation.  

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