The price of everyday goods screeched to a halt in February as inflation flat-lined during the month, official data revealed today.

The 0% reading is down from 0.3% in January and is the lowest point since the government started keeping Consumer Price Index (CPI) inflation figures in 1988.

Cuts in food prices and offers on computing equipment helped force prices down over the month. Falling fuel costs have also contributed to long-term declines.

The figure was lower than most analysts’ expectations of 0.1%.

Business groups welcomed the news saying low inflation meant more spending power for consumers; a fact that would contribute to economic growth.

But James Sproule, chief economist of the Institute of Directors, said low inflation should give the government food for thought over taxes and spending plans.

He said: “Low inflation does mean that governments must be that much more careful with decisions on tax and spending, as very low, or zero, inflation means miscalculations cannot be eroded in future years by inflation.

“An incoming government must be very aware that they will have to live with any changes to tax rates or thresholds for the long term.”

Rain Newton-Smith, CBI director of economics, said that low inflation figures would not last long, given that the impact of reduced oil prices was coming to an end.

“Despite inflation dropping to zero, it is unlikely we will see falling prices for a prolonged period, particularly as the pressure from lower oil prices fades,” she said.

“While lower oil prices are cutting costs for businesses, and leaving households with more money in their pockets, North Sea oil producers are taking a hit.

“The measures to support the industry in the Budget will help address concerns over job losses and investment freezes, but it is not out of the woods yet.

“With the Monetary Policy Committee still alert to the risk of very low inflation becoming entrenched, a rise in interest rates anytime soon seems off the cards.”