Britain’s inflation rate fell sharply in July on the back of falls in seasonal food prices and petrol, according to official data.
National Statistics said today the all-items rate of inflation fell 0.6 per cent in July to stand 1.6 per cent up on a year earlier. The annual rate was last lower in November 1999 when it was 1.4 per cent.
Underlying inflation, which strips out home loan costs, fell 0.6 per cent in July, to stand 2.2 per cent up on the year, below the 2.3 per cent economists expected.
The fall in the underlying measure will reinforce expectations the country's central bank will cut borrowing costs again before the year-end.
The Bank of England cut interest rates to 5 per cent earlier in the month to ward off the threat posed by global slowdown.
Downward pressure came from food prices and particularly those for seasonal food, including potatoes and fresh vegetables.
Another big downward effect came from motoring costs, with petrol prices falling on the back of lower crude oil prices.
The petrol and oil index fell 6.9 per cent in the year to July, the lowest since the series began in January 1987.
PA