Inflation turned negative for the first time in more than half a century in April, official figures showed today.
The Consumer Price Index (CPI) measure of inflation dipped to minus 0.1%, according to the Office of National Statistics (ONS).
It is the lowest rate on record and comes after two previous months of zero inflation.
Britain is not facing "damaging deflation" and is well-equipped to stave off the risk of this happening, George Osborne has said.
The Chancellor made the comment after the latest figures showed that consumer price inflation fell below zero in March.
"We should not mistake this for damaging deflation," Osborne said in a statement, adding that Britons should welcome the lower cost of living driven by a fall in oil prices since last year.
"Of course, we have to remain vigilant to deflationary risks and our system is well equipped to deal with them should they arise," he said.
Economic experts have reinforced George Osborne's view that the negative inflation figures released today are not cause for concern.
Britain has fallen into negative inflation for the first time in 50 years but what does that mean for the economy and consumers?