Inflation set to fall below 1%

Official figures due out on Tuesday are expected to show a further sharp drop in inflation from November's figure of 1%. Analysts believe the falling cost of food and petrol, and the absence of any year-end rise in household energy costs, will push inflation down to between 0.5% and 0.8%. This will force Bank of England governor Mark Carney to write an open letter to the Chancellor, explaining why price rises have fallen so far below target and what the Bank plans to do to bring it back towards 2%. But some economists predict inflation is likely to remain below 1% well into the summer.


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