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UK inflation stays below BoE mark

Official figures show that Britain's annual inflation rate held steady below the Bank of England's 2% target in September.

The Office for National Statistics said consumer prices rose 0.1% last month, keeping the annual rate at 1.8%. Analysts had expected a rise to 1.9%.

The figures, however, are unlikely to alter expectations that the BoE will hold borrowing costs at 5.75% for the next few months as policymakers wait to assess the impact of a credit squeeze in financial markets on the wider economy.

Food had the biggest upward effect on inflation in September as the price of dairy products surged 6.3% on the month. Overall, food added 0.09 percentage points to the annual CPI rate despite an offsetting impact from vegetable prices.

Falling gas and electricity bills made a downward contribution to inflation, as did clothing and footwear, which rose by less than last year.