The consumer price index fell from 0.3 per cent in January to 0 per cent in February, driven by falling oil and food prices.

Today the pound in your pocket buys exactly the same as a year ago, even if it does not always feel like it.

But what does the future hold for your finances?

SAVINGS AND INVESTMENTS

Zero inflation is good news for savers as it means that even with the average savings account paying just 0.67 per cent, according to MoneyFacts, they can still get a positive return on their money.

Also, it should boost the economy and stock market, as consumers spend their gains from cheaper petrol and food on the high street.

Jason Hollands, managing director at Tilney BestInvest, says: "This should push talk of interest rate hikes out into the long grass, which should help support bond and stock markets."

Adrian Lowcock, head of investing at AXA Wealth, says investors looking for a worthwhile return should consider equity income funds. "They pay significantly higher dividend yields than inflation with the prospect for capital growth on top."

Lowcock recommends Schroder UK Alpha Income, which has returned 91 per cent in the past five years and currently yields 3.79 per cent.

MORTGAGES

Homeowners should celebrate low inflation because it means mortgage rates will stay lower for longer.

Simon Tyler, founder of broker Tyler Mortgage Management, says: "There is absolutely no question of interest rates rising while we have zero or negative inflation."

Andy Knee, chief executive of property specialists LMS, says low inflation and cheap mortgages will also support house prices: "We expect the market to be buoyant once the general election uncertainty is over."

WAGES AND DEBT

One big concern is that persistent deflation will hit wage growth, making people feel poorer even if prices are falling.

Professor Steve Keen, head of the School of Economics, Politics & History at Kingston University London, says: "If falling prices become the norm, employers will use this to cut wages."

That would be a disaster for those in debt. Keen adds: "If mortgage rates stay at 2 per cent, but wages fall by 2 per cent, your effective mortgage rate is actually 4 per cent.

HOLIDAYS

Zero inflation is bad news for Britons heading overseas this summer, as it has reversed the pound's recovery.

Sterling hit a recent high of €1.42, but has since dipped nearly 5 per cent to around €1.35. That means for every £1,000 of euros you buy, you will get €70 less compared to just one week ago.

Marianne Gilmore, commercial director at foreign exchange specialists MoneyCorp, says: "Sterling still remains strong compared with two years ago, when it stood at €1.14."

But it is far weaker against the US dollar, plunging from $1.66 to $1.49 in the past year, adding more than 10 per cent to the cost of a trip to the States.

If inflation does dip below zero next month, the pound could fall even further.