Retail inflation softens to 19-month low of 2.05% in January

The biggest monthly fall for gas prices since the 1980s helped drag down United Kingdom inflation to the lowest level in two years in January as the government's energy price cap came into effect.

The Consumer Price Index inflation rate for rural areas stood at 1.29%, while it was 1.50% in December 2018.

The industrial growth for November was revised downwards to 0.3 per cent from the provisional estimate of 0.5 per cent released last month.

Inflation was pulled lower by a decline in electricity, gas and other fuel prices between December and January, which was partially offset by lower air fares. In its February 7 policy statement, it projected consumer inflation at 3.2-3.4 per cent in the first half of next financial year, beginning April 1.

Last week the BoE said inflation was likely to fall below 2.0 percent in coming months before picking up again.

"The further falling back in inflation facilitates the Bank of England maintaining a "wait and see" approach on interest rates until after the United Kingdom leaves the EU", Howard Archer, chief economic adviser to the EY ITEM Club consultancy, said.

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The convergence of the two measures, along with recent surveys from the central bank suggesting slowing inflationary expectations among households and industry, will be key for a clearer assessment of policy actions by the Monetary Policy Committee.

Analysts polled by Reuters had forecast January's annual increase in the consumer price index at 2.48 percent. Vegetables recorded a deflation of 13.32 per cent in January as against a decline of 16.14 per cent a month ago, while sugar and confectionery registered 8.16 per cent deflation as against 9.22 per cent deflation a month ago.

Mining sector output contracted by 1 per cent in December as against 1.2 per cent growth in December 2017, the data showed.

Inflation was dragged down by lower energy and fuel prices. The inflation was 5.07 per cent in January 2018. Prices of health related goods increased 8.93% while education related goods rose by 7.99%.

Economists had predicted growth of 2.0 per cent for December, according to a poll by Reuters.

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