Inflation to ease rate rise fears

The Northern Echo: RATE MAKER: Mark Carney, Governor of the Bank of England, Durham County Cricket Club's Chester-le-Street ground RATE MAKER: Mark Carney, Governor of the Bank of England, Durham County Cricket Club's Chester-le-Street ground

THE UK's longest stretch of low inflation for nine years is expected to be confirmed today.

The Consumer Price Index (CPI) measure of inflation is predicted to have edged up to 1.6 per cent in June, after a falling to a four-and-a-half year low of 1.5 per cent in May.

But it should mean CPI has been at or below the Bank of England's two per cent target for seven months in a row.

It will be the first time this has happened since June 2005, which was the last month of a low-inflation stretch that had lasted several years from 1997.

The extended period of subdued cost-of-living rises eases pressure on Bank of England policy makers to hike interest rates from their historic lows, though it will come as little comfort to workers after average pay growth slumped to 0.7 per cent.

Latest inflation figures from the Office for National Statistics (ONS) come as Bank governor Mark Carney prepares to face MPs on the Treasury Select Committee over measures to designed to guard against an overheating housing market.

Supermarket price wars helped CPI dip to 1.5 per cent in May, with a 0.6 per cent year-on-year decline in food and non-alcoholic drinks prices which was the first in eight years and the heaviest since October 2004.

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