Interest rates are unlikely to rise until the middle of next year as the Bank of England tries to stave off a deflationary spiral, economists said last night. Official figures revealed the inflation rate fell to 0 per cent last month – the lowest level since 1960. Experts warned Britain is now just one month away from deflation as food and petrol prices continue to tumble. The dramatic fall in the cost of goods is likely to push back the timing of an interest rates hike by the Bank of England. Delaying a rates rise would mean continued rock-bottom interest rates for mortgage borrowers, but more misery for savers. The base rate has been held at a historic low 0.5 per cent for six years but the Bank of England has admitted that, far from raising rates, it could even cut them further to avoid prolonged deflation. Lower rates would encourage people to spend, rather than save, stimulating demand and pushing up prices. Ben Brettell, senior economist at stockbrokers Hargreaves Lansdown, said: ‘It appears interest rates will be stuck at 0.5 per cent for some time yet – I don’t see them rising until mid-2016 at the very earliest. The Office for National Statistics found the Consumer Prices Index between February 2014 and February 2015 stood at 0 per cent . With wages rising by 1.6 per cent while prices are flat, it means families should see their money going further each month . ‘The Bank raises rates to curb inflation, but that is obviously not a problem at the moment, so they will keep them on hold.’ John Hawksworth, of PricewaterhouseCoopers, said the Bank was now ‘under no immediate pressure to raise interest rates’. Andrew Haldane, the Bank’s chief economist, suggested earlier this month that rates could be cut to zero because inflation had ‘dropped like a stone’. Low inflation, and even deflation, over a short period can be good for the economy and boost family finances, but a continuous fall in prices is harmful. By ALEX BRUMMER . THE GOOD NEWS . ... AND THE BAD NEWS . Bargain prices in shops could be used by employers as an excuse to keep wages low, while workers could delay big purchases in anticipation that costs will fall further – triggering a downward spiral. Yesterday, Prime Minister David Cameron seemed unconcerned by predictions that prices would fall further, saying Britain did not ‘face the dangerous deflation that some other parts of Europe may potentially have a problem with’. He welcomed the lowest inflation rate in 55 years, saying it was ‘good news for family budgets’, while Chancellor George Osborne declared that ‘prices are frozen’. Estimates released by the Office for National Statistics show the last time inflation was below 0 per cent was March 1960 – when Harold Macmillan was Prime Minister and The Beatles had just formed in Liverpool. The last major bout of deflation came during the Great Depression from 1929 to 1932. It did not end until Britain abandoned the gold standard which the then Chancellor Winston Churchill embraced in 1925. Before that, in the late 19th century the prices of goods, property and shares fell sharply provoking a banking crisis similar in scale and danger to that of 2007 to 2009. In the early 18th century the value of the pound was fixed against gold and prices were flat and falling until the outbreak of the Napoleonic Wars. Inflation measures the rise and fall of 700 goods and services, from energy prices to clothing. But it is the plummeting cost of petrol, diesel and food that has dragged down the rate to zero. In the past year, there has been a huge fall in the cost of global wholesale oil, causing prices at the pump to tumble by almost 17 per cent. An aggressive supermarket price war has also dragged down the inflation rate, as major stores have been forced to compete with budget rivals such as Aldi and Lidl. The ONS reported that food prices had fallen by more than 3 per cent in February compared with a year earlier. Economist Vicky Redwood, at Capital Economics, said: ‘The UK is now within a whisker of deflation. ‘It looks odds-on that inflation will turn negative in March, when the recent cut in gas prices by British Gas show up in the inflation figures for the first time. We still think that deflation in the UK will be a “good” development, giving households’ incomes a welcome boost and supporting the economic recovery this year.’ Rob Wood, of Berenberg Bank, said there was ‘a good chance inflation could turn negative next month’. Economist Chris Williamson, at Markit, said: ‘Rather than being a concern, the drop in inflation is a boon to the economy, providing households with greater spending power at a time when pay growth remains frustratingly weak.’ Chief Secretary to the Treasury Danny Alexander said that, as pay rises pull ahead of price increases, people had more money in their pockets, helping ‘millions of families’. But Shadow Treasury minister Cathy Jamieson said it was external factors that had brought down inflation, rather than the Government’s economic policy. She said: ‘A few months of falling world oil prices won’t solve the deep-seated problems in our economy.’ Since 2010, we've been working through our long-term economic plan to turn Britain around. It hasn't been easy – we inherited a country on the brink of bankruptcy – and I know many of you will have made huge personal sacrifices to support our plan to mend the broken economy and secure a brighter future for this great nation. But it's been worth it. That plan is working. Day by day, month by month, Britain's getting stronger: jobs are on the rise, the deficit's down, the economy's growing and wages are going further. And there's more good news for family budgets, with the inflation figures announced today at a record low of zero per cent. David Cameron told MailOnline the figures were 'more good news for family budgets' and proof the government's economic plan is working . At a time when the world economy is increasingly unstable, these latest figures are a reminder that we're on the right track – and that doing things differently would put it all at risk. It's a reminder that only the Conservatives have a plan to build a stronger economy, improve living standards and make families across Britain more financially secure. We want to help hardworking people keep more of the money they earn. It is individuals – not governments – who know best how to spend their money. That's why, in Government, we've cut income tax for 26 million by raising the personal allowance to over £10,000 – and we will go further in the next Parliament. That's why we've frozen fuel duty for the longest time in 20 years, saving a typical family £10 each time they fill up. That's why we've secured the biggest ever cash rise in the state pension, which will be £950 higher than it was in 2010. That's why we're introducing tax-free childcare – helping out parents with hefty childcare bills. That's why we provided funding to freeze council tax bills, putting more money in hardworking taxpayers' pockets. Don't just take me by my word. Judge me by my record in Government: we've delivered 2 million quality apprenticeships in the past five years, and will deliver 3 million more in the next five – giving young people the skills to go out and get a well-paid job. We're backing business, industry and enterprise – creating 1,000 jobs a day and driving down unemployment - now at its lowest level since 2008. We're getting Britain building again, helping young people to own their own home. We've already announced 200,000 cut-price homes for first-time buyers under 40. And we will now help first-time buyers save for a deposit. A strong economy is the backbone of a strong nation. And a strong nation is built on people who work hard and want to get on life. Mums and dads working round the clock to put food on the table and do the best they can for their children; grandparents who've saved hard all their lives to support their loved ones in times of need; sons and daughters who want to get on with their lives, get a job, get a home, and make something of themselves. A Conservative Government after May 8 will carry on working through our plan to secure a brighter future for you, your family and for Britain. Step by step, milestone after milestone. Last week it was a record increase in the minimum wage, today it's the rate of inflation. This Government has a long-term plan – and we're determined to make it work for you.
Consumer Prices Index falls to 0%, meaning prices did not rise in a year . Sharp falls in food and petrol costs helped to ease the pressure on families . David Cameron tells MailOnline it is 'more good news for family budgets'
Wages rising by 1.6% means workers should see their money go further .