UK inflation in February fell to zero for the first time on record, mainly due to a sharp fall in the prices of fuel and food.

According to the Office for National Statistics, consumer prices were unchanged in February compared to the same month last year, after rising 0.3 per cent in January.

This was the first time that inflation was zero since the current data series began in 1989 and puts Britain on course for its first period of falling consumer prices in more than half a century. Based on constructed historical data, it is the weakest since 1960.

Economists were expecting prices to rise by 0.1 per cent. Core inflation, that excludes volatile items like food and energy, eased to 1.2 per cent from 1.4 per cent in January.

Meanwhile, business activity in the 19-country euro bloc in March expanded faster than economists had forecast, suggesting that a fragile but sustainable recovery is under way. A Purchasing Managers’ Index (PMI) for the manufacturing and services sectors across the region rose to 54.1 from 53.3 in February, according to a surveys by Markit Economics.

The surveys suggest the eurozone economy grew by 0.3 per cent. The currency bloc’s economy, overcoming its longest ever recession, is gathering momentum as the European Central Bank starts its massive bond-purchase programme this month.

Lastly, the US Federal Reserve should probably raise interest rates by the end of the year, Fed vice chairman Stanley Fischer said last week at the Economic Club of New York. “Whether it’s going to be June or September, or some later date, or some date in between, will depend on the data,” Fischer said.

The Labour Department issued strong US jobs reports for January and February.

The Fed dropped its pledge to be “patient” after last week’s monetary policy meeting, a strong indication that it will hike interest rates in June or September. The move to remove the “patient” phrase came despite concerns about the rapid rise in the US dollar, which recently touched 12-year highs against the euro.

But the Fed dampened expectations by downgrading its outlook for the economy, inflation and interest rate trajectory, suggesting that interest rates will not rise soon.

This report was compiled by Bank of Valletta plc for general information purposes only.