Britain's annual inflation rate slowed to 1.6 per cent in October, trimmed by cheaper home loans and retail discounts, official figures showed on today.
Although slightly above market expectations, the annual all-items rate has not been lower since November 1999 when it was 1.4 per cent, the Office for National Statistics said.
British price pessures are expected to recede further in coming months, allowing the Bank of England to focus on supporting economic growth with more interest rate cuts rather than having to fight inflation, economists said.
The outlook going forward looks benign, with upstream price pressures nonexistent, said Mr George Buckley, UK economist at Deutsche Bank in London.
Tame inflation has enabled the Bank to cut interest rates seven times this year to a 37-year low of 4 per cent. The Bank is expected to trim its forecasts for inflation in its next quarterly inflation report due out on Wednesday.
Financial markets, which were focusing heavily on events in Afghanistan and the investigation into Monday's air crash in New York, were unmoved by the inflation data, which virtually matched economists' forecasts.
