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UK CPI falls to 2.3 pct in April, lowest since Jan 2008

Published 05/19/2009, 04:32 AM
Updated 05/19/2009, 04:48 AM

LONDON, May 19 (Reuters) - British consumer price inflation fell more than expected in April to its lowest level in more than a year in April because of the declining cost of food and energy, official data showed on Tuesday.

The Office for National Statistics said consumer prices rose by 0.2 percent on the month, bringing the annual rate down to 2.3 percent from 2.9 percent in March. That was the lowest since January 2008 and below analysts' expectations of 2.4 percent.

That still left CPI above the Bank of England's 2 percent target but policymakers are expecting further sharp declines in inflation and are more focused on reviving growth in an economy that is on track to shrink at its fastest pace since World War Two this year.

The RPI measure of inflation, on which many wage deals are based and includes falling mortgage interest payments, fell to -1.2 percent, the lowest since records began in June 1948.

The ONS said the biggest downward effect on CPI inflation came from electricity and gas bills as providers cut prices following last year's record jumps.

Food prices also had a big downward effect with meat and vegetable prices falling this year compared with rises a year ago. There had been some concern that food prices would keep pushing up inflation given the weakness of the pound.

Tobacco and alcohol prices also had a negative effect on the CPI rate but this could be reversed soon as annual rises in duty are taking place a month later this year than last.

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