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Inflation likely to fall below 1% in UK - ING

FXStreet (Barcelona) - James Knightley, Senior Economist at ING views sub-1% inflation readings likely for the UK in the new year.

Key Quotes

“UK inflation is on a strong disinflationary trend with sub-1% readings looking likely in the new year. After peaking at 5.1% in September 2011, UK consumer price inflation has been on a downward trend, hitting just 1.2% last month.”

“This is the slowest rate of inflation in five years and further falls are likely in the months ahead given the lack of pipeline price pressures within the PPI reports. Additionally, core inflation surprisingly fell from 1.9% to 1.5% last month, and so there is scope for some unwind of this.”

“Nonetheless, a sub-1% inflation situation offers the BoE plenty of room to leave policy loose for now, with little prospect of higher rates until after the May General Election”

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