Inflation Set To Fall Below Government Target
14 / Jul / 2009
Inflation looks set to fall below the Bank of England's target for the first time in almost two years in June due to falling energy costs and favourable base effects. Despite the sharpest economic contraction in more than 50 years, inflation has been slower to fall in Britain than in many of its trading partners, largely because of the pound's sharp drop on the foreign exchanges. Consumer price inflation has been above the central bank's 2 percent target since October 2007, peaking at a series high of 5.2 percent last September. Downward pressure is likely to come from food, where the rate of increase is likely to be considerably smaller than the 2 percent jump seen in the same month last year. Utility bills and airfares are also likely to have had a dampening impact. Petrol prices rose around 5 percent last month, similar to June.