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Britain: Annual inflation falls to lowest level since 2016

Britain annual inflation falls to lowest level since 2016

Inflation in the United Kingdom has slowed to its lowest level since August 2016, as energy prices have fallen and economic activity has been halted due to restrictions imposed to slow the spread of coronavirus.

According to data from the Office for National Statistics, consumer prices rose 0.8% in April on an annual basis, below expectations of a 0.9% increase, while core inflation, which excludes fluctuating energy and food prices, fell to 1.4%.

The data will boost speculation about the need for further action by the Bank of England, sparking controversy among policymakers about the possibility of cutting interest rates below zero for the first time.

During March, the Bank of England increased its bond-buying program by a record 200 billion pounds, as the spread of the Coronavirus accelerated during that period, but after the current data, expectations of further actions will rise during the next meeting.

Analysts believe the British central bank may be forced to cut interest rates below zero by the end of this year, in an event that could happen for the first time in the history of the British economy.

As of 13:30 GMT, BOE Governor Andrew Bailey will testify on the economic impact of COVID-19 before the Treasury Select Committee in London.  

At press time, the British pound trader slightly higher against the US dollar at 1.2262, but it is still below the previous session’s top of 1.2296.

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