Deflation is worse than inflation, says expert

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Deflation is worse than inflation, says expert

Michael Baxter, editor of Investment and Business News, agrees with the Bank of England's prediction that inflation will drop suddenly this year and warns that steep deflation is a cause for concern.

Explaining why inflation is so pronounced in the UK, Mr Baxter suggested that the reasons were the fall in value of the pound and the "reversal of the VAT cut".

He said: "I don't sign up to the view that we're going to have runaway inflation like some people do. If you look at wages, inflation is very modest."

A recent poll undertaken by YouGov on behalf of uSwitch.com revealed that more than 50 per cent of workers did not expect a salary increase this year while over a third of consumers expected to be worse off than in 2009.

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