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Bank predicts fall in CPI next year

Inflation will ease in 2009, a new Bank of England report has predicted.The consensus among respondents to the poll was that the Consumer Price Index (CPI) would fall to 2.8 per cent over the next 12 months.This is down both on last month's reading of 4.5 per cent and August's 12-month prediction of 4.4 per cent.In October, CPI hit a 16-year high of 5.2 per cent.However, it has now begun to fall, due in part to the precipitous recent decline of oil prices.Barrels of crude have retreated from July's high of $147 to their current price of just over $40.The predicted inflation easing comes despite the fact that the Bank is widely expected to cut its official interest rate further next year.Global Insight economist Howard Archer added: "Respondents [to the Bank poll] are… likely to have been influenced by the ever increasing discounting and sales being seen on the high street as increasingly struggling retailers battle to get consumers' dwindling business."

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