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March 24, 2010

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Home » Business » Economy

UK inflation slows, falling more than expected

BRITISH annual consumer price inflation slowed last month for the first time since September, dropping more than expected after favorable base effects and a fall in the prices of games and toys, according to data revealed yesterday.

The Office for National Statistics said consumer price inflation slowed to 3.0 percent last month from January's 14-month high of 3.5 percent. Analysts had expected the annual rate to ease to 3.1 percent.

Yesterday's data is likely to raise hopes that inflation has peaked, and will drop back below the Bank of England's 2 percent target by the end of the year.

The central bank has insisted that the recent spike in inflation will be transitory, as it was caused by base effects relating to 2008's sharp oil price falls and a temporary cut in value-added tax dropping out of the year-on-year comparison.

Weak growth and high unemployment limit the ability of firms and workers to raise prices and wages.

On the month, consumer price inflation rose 0.4 percent, versus a 0.2 percent fall in January. However the ONS said this was a smaller rise than in February 2009, when prices rebounded a record 0.9 percent.





 

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