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U.K. inflation below BOE's target

Staff writer |
U.K. inflation cooled in January, slowing to below the Bank of England's 2 percent target. Consumer prices rose an annual 1.9 percent, down from 2 percent in December, the Office for National Statistics said.

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The largest downward contribution came from DVDs, museum entry fees, household goods and alcohol. The BOE forecasts that inflation will remain close to its goal over the next three years and that price expectations remain well anchored.

The report showed that consumer prices fell 0.6 percent in January from December, the biggest monthly decline since January 2009. The core annual inflation rate slipped to 1.6 percent from 1.7 percent, the lowest since June 2009.

The Bank of England (BOE) last week lowered its forecast for inflation while raising its projections for growth. Retail-price inflation, a measure used in wage negotiations and as a basis for the inflation-linked bond market, accelerated to 2.8 percent in January from 2.7 percent in December. Inflation by that measure excluding mortgage-interest costs was also 2.8 percent.

The statistics office also said that gas and electricity tariffs made "very little contribution" to the annual consumer-price inflation rate, with recent increases and reductions canceling each other out.

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