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UK inflation falls to 1.9% in January


The UK’s inflation rate, as measured by consumer prices index (CPI) fell below the Bank of England’s target for the first time in over four years in January.

The reduced inflation rate is largely due to a fall in costs of recreational and cultural activities such as DVD prices and lower entrance fees to local attractions. Additionally, reductions in the costs of other items such as alcohol, tobacco and household goods helped to reduce the rate of inflation.

Prime minister, David Cameron tweeted his positive sentiments in relation to the newly announced figures, announcing that he felt they supported the government’s economic strategy.

"Today's fall in inflation is more evidence our long term economic plan is working," Mr Cameron tweeted. "We want to ensure a secure future for hard-working people."

Furthermore, the fall is likely to support the Bank of England Governor’s recent suggestions that base interest rates will not be increased in the near future, as they remain at the benchmark low of 0.5%.

The British Chambers of Commerce, Chief Economist David Kern supported this saying that: "An economic environment of low inflation and low interest rates allows people and firms to plan ahead, as they can be confident they will not encounter any unwelcome surprises."

However, Labour did state that they feel the drop in the rate of inflation will make little difference to the working population as Treasury Minister Cathy Jamieson stated: "This small fall in the inflation rate is welcome, but with prices still rising much faster than wages the cost-of-living crisis continues."

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