Inflation hits four-year low

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 2...