Investments  

Inflation falls below 2% for first time in four years

The rate of UK inflation has fallen under 2 per cent for the first time since November 2009, according to data from the Office for National Statistics (ONS).

The consumer prices index (CPI) measure of inflation fell to 1.9 per cent in January, down from 2 per cent in December, and continuing the steady decline seen in the second half of 2013.

The ONS said that the fall in the rate of inflation came from a decline in prices for “recreational goods & services, furniture and household goods, and alcoholic beverages & tobacco”.

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The drop in inflation below the Bank of England’s target of 2 per cent has bolstered the case for keeping interest rates low for longer as a rise in interest rates is expected to lead to a drop in economic activity and therefore a drop in inflation.