families will enjoy the biggest boost to their finances for more than a decade as inflation is set to tumble to zero while wages rise inflation has already plunged to 03 per cent – its lowest level since 1960 – after a big fall in the cost of essentials such as food and fuel and bank of england governor mark carney told parliament yesterday that it would ‘likely fall further to around zero in the coming months, and remain near there for much of the year’ scroll down for video  mark carney said prices were likely to remain flat for the rest of the year because of falling prices of oil and food  the bank also forecasts that real post tax income is expected to rise by 35 per cent this year as the long squeeze on living standards comes to an end that means british households can expect their biggest boost in spending power since 2001, experts say chancellor george osborne hopes that the easing pressure on family finances and the continuing economic recovery will help the conservatives at may’s general election tory strategists believe the party’s move ahead of labour in recent opinion polls shows more voters are starting to feel the benefits of the economic turnaround labour planned to make a ‘cost of living crisis’ a major election issue, but the news seems to support conservative claims that their economic plan is working last night the treasury hailed mr carney’s inflation forecast as ‘good news’ for households mr carney, giving evidence to the house of lords economic affairs committee, said: ‘the combination of rising wages and weak headline inflation will strengthen household finances and boost real take home pay growth this year to the fastest rate in a decade in turn, this will support continued solid growth in consumer spending’ inflation has already hit the lowest level on record   hitting just 03 per cent in january   but mr carney said it would be 'extremely foolish' to slash interest rates to try to get inflation back to its target rate of 2 per cent  mr carney warned that interest rates are likely to rise at some point – but said that when that happens the increases will be ‘gradual’ and ‘limited’ rates have been frozen at a record low of 05 per cent for more than six years there has been speculation that the bank could cut rates even further – towards zero – if inflation threatened to fall too far and turn into a dangerous bout of deflation such a move would spell misery for savers – who have already missed out on around £130billion in interest payments because of ultra low rates – but would be welcomed by borrowers but mr carney yesterday insisted that it would be ‘extremely foolish’ to cut rates to counter the uncontrollable fall in global oil prices he said it would risk adding ‘unnecessary volatility in inflation’ and that he expects inflation to return to its 2 per cent target ‘within two years’ a report by the british chambers of commerce, published today, predicts interest rates will rise to 075 per cent ‘no earlier’ than the first three months of next year the bcc is also raising its uk growth forecasts from 26 per cent to 27 per cent for this year and from 24 per cent to 26 per cent in 2016 that follows expansion of 26 per cent last year – when the uk was the fastest growing economy in the g7 group of leading nations growth is expected to pick up to 07 per cent in the first three months of this year following a 05 per cent rise in output in the final quarter of last year john longworth, director general of the bcc, said: ‘businesses up and down the country are doing well despite international and domestic uncertainty ‘while 2015 has got off to a good start, there is no room for complacency the uk is still a long way from achieving the great, sustainable, long term growth we want to see’ a treasury spokesman said: ‘the latest economic forecasts from the bcc are yet further proof that our long term economic plan is working, with the strongest growth of any major advanced economy last year and showing upgrades to uk growth forecasts for 2015 and 2016 but the bcc are right to say the job is not yet done so we must keep working through the plan that is delivering economic security in an uncertain world economy’ inflation as measured by the consumer prices index was last at zero or below between december 1959 and march 1960, according to the office for national statistics
03% january bank carney the year
inflation hit 03% in january   already the lowest level on record . but in a boost for families the bank chief said inflation would fall to zero . mr carney said prices were unlikely to rise for the the rest of the year . but he said it would be 'extremely foolish' to slash interest in response 