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Inflation falls in UK but not as fast as hoped for

THE Bank of England's target measure of inflation fell to a one-year low in March but remained higher than the bank had anticipated as recently as February, official figures showed yesterday.

The Office for National Statistics said lower gas bills helped consumer price inflation - the bank's target measure - drop to 2.9 percent in the year to March from 3.2 percent in the year to February. March's rate was the lowest since March 2008, when inflation stood at 2.5 percent.

The fall was in line with market expectations but does mean that consumer price inflation in Britain has not fallen as fast as the central bank was anticipating when it published its last set of quarterly projections in February. The central bank is tasked by government to set monetary policy to hit a 2 percent in two years' time.

The slower-than-anticipated decline may be largely to do with the sharp decline of the pound in recent months, a rate-setter at the central bank said yesterday. A lower pound makes exports cheaper but the price of imported goods more expensive.

"The recent data suggests that the downward momentum of inflation in the short term may not be as strong as we thought in February - probably because of the very marked depreciation in sterling since the summer of 2007," said Andrew Sentance, a member of the nine-strong rate-setting panel at the central bank.

Inflation has fallen from 5.2 percent in September.


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