UK inflation has fallen to its lowest level in over four years, according to official statistics.
The main measure of inflation, the Consumer Prices Index (CPI), fell from 1.8% in July to 1.6% in August. This is the lowest rate of CPI since January 2005.
A broader measure of inflation, the Retail Prices Index (RPI), has risen, from -1.4% to -1.3%.
CPI has a 2% target, with a 1% ‘band of tolerance' either side, and analysts widely expect it to fall below 1% in September.
If inflation falls below 1%, the Bank of England's governor, Mervyn King, will have to write to the Chancellor to explain the situation. King already wrote the Chancellor on several occasions during 2007 and 2008, when inflation tipped over 3%.
The Bank of England maintained interest rates at 0.5% this month, and is expected to do so until inflation begins to rise again.
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