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UK inflation falls to 1.2%

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This represents a fall from 1.5 per cent, the figure for August, the lowest since September 2009, which was 1.1 per cent.

The ONS (Office for National Statistics) told the BBC that lower energy, food and transport prices contributed to the fall in inflation.

As a result, the pound saw a drop against the dollar, from 1.61 to 1.595.

David Kern, chief economist at the British Chambers of Commerce (BCC) said: These figures confirm that inflationary pressures in the economy remain muted and have eased in recent months. 

With oil and food prices now falling, there is a possibility that CPI inflation will fall below one per cent before the end of this year. This fall in inflation, coupled with weak wage growth, reinforces our call for the MPC to keep interest rates at their current level for the foreseeable future.”

Recent surveys show that the recovery is on track, but is still fragile and faces challenges. 

“Given global economic uncertainties this is clearly not the time to put the recovery at risk with premature interest rate increases.”

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