INFLATION fell below the Bank of
Though inflation has not been below two per cent since
"This should enable real pay to rise for the first year since 2007 and allow the monetary policy committee to keep interest rates on hold until late 2015," said
Above-target inflation has been part of the pressure on
"In the short-run, it is possible that inflation could creep down further. The recent impact of sterling appreciation is likely to result in further moderation of prices. There may also be some further softness in international food prices feeding through to domestic prices," added
Core CPI, which measures price increases without volatile items like energy, food and alcoholic drinks, dropped to only 1.6 per cent in January. Energy prices rose at a slower pace, up 6.6 per cent. As recently as August, energy prices rose by 7.8 per cent in the previous 12 month period.
The retail price index (RPI) hit 2.8 per cent last month, well above CPI. RPI was previously used as the official level of inflation.
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