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Inflation sees further surprise fall to 2.8%

by: Katie Holliday
  • 19/06/2012
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Inflation sees further surprise fall to 2.8%
The UK's Consumer Price Inflation rate posted another surprise drop in May, falling to 2.8%, as the lack of activity in the UK continues to bring prices down sharply.

While many economists had expected the Consumer Prices Index (CPI) to hold at 3% in May, after the steep drop in April’s reading, the fall in prices shows no sign of letting up as yet, reported the Office for National Statistics (ONS).

It comes after last month’s inflation figure posted a surprise fall from 3.5% to 3% beating consensus forecasts, and leaving inflation at its lowest level since February 2010.

At the same time the Retail Prices Index inflation slowed from 3.6% to 3.5%, against a 3.4% consensus forecast.

Inflation has fallen from 5.3% last September due to the slowing impact of the VAT hike at the start of 2011, in addition to falling energy, food and commodity prices, together with bill cuts from utility providers.

Further inflation declines will encourage the Bank of England to inject more emergency cash into the economy through its quantitative easing programme, as the eurozone crisis continues to threaten the UK’s economic recovery.

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