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Inflation fell sharply in January

Inflation fell for the fourth month in a row in January, new figures show.

The CPI inflation rate fell to 3.6%, down from 4.2% in December as the impact of last year's VAT rise dropped out of the year on year comparison.

Fuel prices, the cost of new cars and prices paid in restaurants and cafes were among the factors slowing inflation.

The headline rate has been declining since hitting a three year high of 5.2% in September and is expected to continue to fall through much of 2012.

Last week's decision by the Monetary Policy Committee to start a fresh round of quantitative easing was driven by concerns that the inflation rate could drop below the Bank of England's 2% target.

The RPI measure of inflation, which includes housing costs, fell from 4.8% to 3.9%.

Source : James Reed - The Business Desk, Yorkshire

14 February 2012
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