Some 88% of financial services professionals are wary of the impact on the UK economy of falling inflation, a Chartered Institute for Securities & Investment (CISI) survey shows.

Only 12% of respondents to the survey feel that the drop in the CPI inflation, now at its record lowest level of 0.3%, is overwhelmingly good news for the country.

A larger proportion – 18% – of the near 650 people who took part are concerned that the CPI figure, 1.7% below the Bank of England’s inflation target, signals that the UK is on the road to deflation and economic stagnation.

A further 47% said that the reading is a mixed blessing with 23% seeing it as a cause for concern.

downward trend graph 1 (PD)One respondent commented: “Short term it is a good thing, bringing lower prices and allowing wages to exceed inflation. However, if it persists with the crash of the asset bubbles then it will be catastrophic.”

Another warned “deflationary pressures may be looming – this is the danger.

But on a brighter note a further contributor said: “It is substantially good that prices have fallen substantially below wage growth for the first time since the financial crisis.”

Mark Carney, Governor of the Bank of England this month, in an inflation report this month, said that the CPI could temporarily turn negative in the spring because of falling oil and energy prices. But he said that inflation was likely to rebound around the turn of the year.

Take part in the latest CISI survey at cisi.org here.

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