Underlying UK inflation rate drops to 1.8%

The underlying rate of British inflation fell by 0.5 per cent during May to 1.8 per cent.

The underlying rate of British inflation fell by 0.5 per cent during May to 1.8 per cent.

This is the sharpest month-on-month fall since October, 1993.

The headline rate of inflation, which includes mortgage interest payments, was down 0.4 per cent to 1.1 per cent.

The underlying rate compares with Chancellor Gordon Brown's target of 2.5 per cent.

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It has revisited November's low of 1.8 per cent after a change in food prices affected figures.

The figure is the lowest since the Office for National Statistics started monitoring inflation in 1975.

Underlying inflation has also fallen to 1.8 per cent in January, 2001, and November, 2001.

May's underlying inflation figure is lower than the 2 per cent which economists had predicted.

Economists had expected the headline rate to fall to 1.3 per cent.

Further downward pressure came from petrol prices, which were down slightly in May compared with a year earlier, and newspaper prices - following cuts by some national dailies.

PA