UK Inflation falls to 3.1%

by Dave Keating | January 20, 2009 at 03:38 am

41 views | 0 Recommendations | 0 comments

As economic troubles continue to pile on the UK, today it was announced that inflation fell by less than expected in December, to 3.1 percent. However economists are still predicting that the UK will see deflation at some point this year, with prices steadily decreasing.b

Inflation fell by less than expected in December, official data out today showed, but economists still forecast a prolonged period of deflation later in the year.

The Office for National Statistics said that consumer price inflation slowed to 3.1% in December, from 4.1% the previous month. This is the lowest level since April 2008 but still above the Bank of England's official target of 2%. Economists had predicted a drop to 2.6% but still high food and gas and electricity prices prevented the rate from falling faster.

But core inflation, which excludes things like food and energy prices, fell more sharply than expected to 1.1% last month, from 2% in November, due to a combination of the VAT cut and aggressive discounting over the Christmas period.