17 Feb

Inflation falls again

Inflation falls again

Consumer prices index (CPI) inflation has fallen again, official figures have revealed.

The official rate dipped from 3.1 per cent in December to three per cent in January, bringing it back within the permitted level of variation from its two per cent target rate.

However, the change was less than expected by analysts, who had anticipated a drop to 2.7 per cent.

The Office for National Statistics said the reduction had been influenced by lower transport and household service costs, while the reduction in price between January 2009 and a year earlier had been limited due to the higher than normal amount of discounting ahead of the January sales over the Christmas period.

Such considerations may be taken into account by the Bank of England's monetary policy committee (MPC) as it considers the possible implications for monetary policy, with any further base rate cut potentially lowering the cost of mortgages further.

Earlier this week MPC member and deputy governor of the bank Charles Bean said the rate-setting body will "probably" need to act again to keep inflation levels within the target range.
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