UK inflation fell more sharply than expected to the lowest level in 2 and a half years, keeping the Bank of England on track to reduce interest rates later this year.
| UK inflation fell more sharply than expected to the lowest level in 2½ years, keeping the Bank of England on track to reduce interest rates later this year.
“Inflation is heading in the right direction and should fall below the Bank of England’s 2 per cent target sometime in the spring,” said Alpesh Paleja, lead economist at the CBI. “However, the path beyond this is likely to be bumpy. Shifting base effects mean that it will likely rise back above 2 per cent later in the year.”The pound whipsawed after the release, briefly falling to a day’s low of $US1.27 before erasing losses.
The latest reading brings the UK closer to the inflation levels prevailing in the US and euro area, where policymakers are preparing to ease off on the monetary tightening imposed to get prices under control after the pandemic.Britain had the worst inflation in the Group of Seven nations last year after a jump in food and energy prices prompted workers to demand higher wages.
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