The United Kingdom is likely to remain under deflation trap for at least another two-and-a-half years as Britain suffers an apparently intractable bout of debt deflation, the Telegraph has said.
The forecast, by a team at BNP Paribas, states that prices in Britain will keep falling for atleast another two-and-a-half-years, Telegraph said.
This prediction "comes only days before official figures confirm this on Tuesday that the Retail Price Index has dipped into negative territory for the first time in almost half a century," it said.
Debt deflation is the combination of falling prices and rising debt burdens that afflicted the US during the Great Depression.
The newspaper further said: "While many assume the combination of near-zero interest rates and a heavily-devalued pound will help prevent falling prices from becoming entrenched, and may stoke inflation, the BNP Paribas economists said they expected deflation to persist all the way until 2012."
The fall in prices is expected to be broad-based across the economy, pushing into the red not only the RPI but also the Consumer Price Index.