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Inflation drops to 2.7%
14/02/2007
Consumer prices index inflation dropped from three per cent to 2.7 per cent in January - its biggest reduction in four years.
The Office of National Statistics revealed yesterday that the new inflation level was lower than the general prediction of 2.9 per cent.
A fall in inflation comes after it stood at a decade-high figure in December and it also means that the chances of a further interest rate rise have lowered.
The inflation figures go some way to explaining the decision by the Bank of England's monetary policy committee (MPC) to hold interest rates at 5.25 per cent this month.
Jonathan Loynes at the consultancy Capital Economics told the Financial Times: "January's fall in consumer price inflation should put an end to the danger that the MPC will have to write an explanatory letter to the chancellor in the foreseeable future.
"Nonetheless, with RPI (retail prices index) inflation still above four per cent, the threat of a pick-up in wages growth remains and the committee is concerned over the strength of asset prices and money growth."
He added that his company still expects interest to rise once more during the coming months as a consequence of this.
The Office of National Statistics revealed yesterday that the new inflation level was lower than the general prediction of 2.9 per cent.
A fall in inflation comes after it stood at a decade-high figure in December and it also means that the chances of a further interest rate rise have lowered.
The inflation figures go some way to explaining the decision by the Bank of England's monetary policy committee (MPC) to hold interest rates at 5.25 per cent this month.
Jonathan Loynes at the consultancy Capital Economics told the Financial Times: "January's fall in consumer price inflation should put an end to the danger that the MPC will have to write an explanatory letter to the chancellor in the foreseeable future.
"Nonetheless, with RPI (retail prices index) inflation still above four per cent, the threat of a pick-up in wages growth remains and the committee is concerned over the strength of asset prices and money growth."
He added that his company still expects interest to rise once more during the coming months as a consequence of this.