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UK fear of inflation lowest for 13 years

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UK households' inflation expectations fell in February to their lowest level in over 13 years, according to the Bank of England. The quarterly survey showed inflation expectations for the year ahead down to 1.9% from 2.5% in November, while the proportion of Britons expecting interest rates to rise in the next 12 months fell to 36% from 37%. Those expecting a cut doubled to 8% – the highest since August 2012. The Bank's report follows official data showing that consumer price inflation fell to 0.3% in January, its lowest level since records began. Howard Archer of IHS Global Insight said: 'The Bank of England will take careful note of the further drop in the public's inflation expectations in February. Crucially, though, while inflation expectations are now at an historically weak level, there is still no evidence that meaningful deflation is expected.' He suggested it was 'touch and go' whether the Bank would start to raise interest rates at the end of this year.

 

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