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UK: Inflation drops to 2.8% as oil prices slide

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Goverment figures shows annual inflation rate, measured on consumer price index, slipped to 2.8% in May from 3% in April.

Inflation has slipped to its lowest level in two and a half years, in a rare piece of good news for Britain’s recession-hit households.

The Office for National Statistics said the annual inflation rate, measured on the consumer price index, slipped to 2.8% last month from 3% in April, as falling oil prices fed through to cheaper petrol at the pump. The ONS cited motor fuels as the biggest factor, with petrol prices falling by 4.5p a litre in a single month, to stand at £1.37. During May, the cost of a barrel of Brent crude oil on international markets slipped from $120 to $103. It has since fallen further, to $83. On the retail price index measure, which also includes housing costs, inflation slipped to 3.1% in May from 3.5% a month earlier.

Though inflation is still well above the Bank of England‘s target of 2%, the fall should help to reassure policymakers that they can take more action to stimulate the economy without sparking a renewed surge in prices.


Posted by on June 19, 2012. Filed under Europe,UK. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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