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UK Inflation falls below 5%

THE headline inflation rate continued to fall away in November hitting 4.8%.

The decline in the annual CPI rate continues the trend seen last month when inflation fell from 5.2% to 5%.

It represents further vindication for the Bank of England's forecasts that inflation will continue to fall next year and may even drop below the 2% target.

The RPI measure, which includes housing costs, fell from 5.4% to 5.2%.

Coverage of the inflation data is brought to readers of in association with stockbrokers Redmayne-Bentley.

Senior stockbroker David Scott said: "The Bank of England will be please with this directional move as they have increasingly recently been accused of abandoning their target of 2% by a growing number of commentators.

"The Bank is forecasting inflation to hit 1.5% next year. The ONS said food prices rose at a much slower pace between October and November than they did a year ago, aided by good harvests for vegetables. Prices for fuels and clothing also rose at a slower pace, although alcohol prices rose at a record pace for the time of year.

"The economic slowdown is clearly taking its toll and yesterday Economists at Standard Chartered bank, who have an excellent track record, predicted that the UK economy will contract by 1.3% in 2012, having previously predicted growth of 0.6% for next year.

"With the European crisis escalating even these numbers may prove optimistic."

Source: James Reed - The Business Desk

13 December 2011
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