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Milk Price Cuts Put Surprise Damper on Inflation Rate

Posted on: Thursday, 20 April 2006, 15:00 CDT

By Evening Standard, London

Apr. 20--Tumbling milk prices have driven inflation to its lowest for more than a year, official figures showed today.

The Consumer Prices Index unexpectedly fell from 2 percent to 1.8 percent in March, its lowest since February last year. The Office for National Statistics said milk prices dropped by an average 2p a pint during the month in contrast to increases a year ago.

There was also downward pressure from falling air fares and petrol pump prices were steady compared with increases last year. Analysts said spiralling oil prices and utility bills were likely to push inflation above its 2 percent target in coming months and today's figures reinforced expectations the Bank of England will hold interest rates at 4.5 percent for some time.

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Copyright (c) 2006, Evening Standard, London

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Source: Evening Standard

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