Further QE 'likely' after unexpected fall in inflation

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Economists say the sharp drop in inflation announced today could justify a further round of quantitative easing by the Bank of England.

Data from the Office for National Statistics show prices in the UK are rising at their slowest rate since the end of 2009. The consumer price index dropped from 2.8% in May to 2.4% in June after a sharp drop the previous month from 3%. Meanwhile the retail prices index, which includes housing costs, fell to 2.8% from 3.1%. Falling prices for petrol, clothing and footwear, transport and food and drink all contributed to downward pressure on inflation. Schroders European economist Azad Zangana said the fall came against city expectations of no change and reflected how the squeeze ...

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