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Surprise fall in UK inflation

Bank of England - Good news on UK inflation figures
Bank of England - Good news on UK inflation figures

British inflation was at its lowest level since March today after figures for September showed the annual rate had fallen by 0.2% to 1.1%.

Significant reductions in air fares contributed to the surprise drop, which should lessen the pressure on the need for immediate interest rate rises.

Seasonal falls in the cost of both plane and ferry tickets from high summer levels were far greater than last year's discounts, the Office for National Statistics (ONS) said in today's Consumer Prices Index update.

Analysts had expected the rate of inflation to remain unchanged following two consecutive falls in July and August. It is now well below the Government's target of 2%, although the Bank of England expects the figure to rise soon.

UK economists said the latest figure gave the Bank room to move on interest rates, which they believe will remain at 4.75% for the rest of the year.