Sharp falls in oil prices pulled Britain's underlying inflation rate down to just 1.8 per cent in January - the lowest since records began in 1976, official data showed today.
Mr Philip Shaw, chief economist at Investec Bank in London said: "The figures are clearly better than expectations and underline the point that inflation pressures are very, very benign at present."
Using the European Union's harmonised HICP measure, British inflation was 0.8 per cent during last year. This was the lowest in the European Union. The average EU HICP rate during 2000 was 2.1 per cent while Ireland's HICP clocked in at 3.9 per cent.
Petrol prices in Britain fell by four pence a litre between December and January to around 77 pence a litre, but those remain the highest prices in the European Union.
World oil prices are just under $29 a barrel. This is well down from recent peaks.
British underlying inflation (which excludes mortgage payments) marks the 22nd consecutive month below the Bank of England's target of 2.5 per cent.
Reuters