A key measure of UK inflation has fallen to zero for the first time in 49 years, official figures show.

The Retail Prices Index (RPI), which includes housing costs, fell to 0% in February on an annual basis from 0.1% in January.

There are concerns that if prices keep falling, this could lead to a prolonged period of deflation.

The Consumer Prices Index (CPI), which is used in economic policy, rose unexpectedly from 3% to 3.2%.

The increase now means Bank of England head Mervyn King will have to write to Chancellor Alistair Darling, to explain why inflation is more than one percentage point above the government's own 2% target.

According to the BBC's Hugh Pym, the latest CPI figures might suggest the situation on the High Street is not as weak as previously thought.

The fall in RPI, as recorded in the latest Office for National Statistics data, stems largely from the fall in mortgage repayments after a series of interest rate cuts.

The Bank of England uses the index of consumer prices (CPI) to set interest rates.

But the government uses the broader measure of RPI to set the level of state pensions, welfare benefits and index-linked government bonds.

SOURCE: BBC News