U.K. Inflation Has Surprise Drop to 1.2%

A surprise drop in U.K. inflation to the lowest level in five years may give Mark Carney scope to keep interest rates at a record low for longer.

The rate of consumer-price growth declined in September to 1.2 percent, the least since 2009, as falling oil prices and a stronger pound lowered the cost of imports. The report from the Office for National Statistics underscores the case for the Bank of England governor to maintain emergency policy settings as a deterioration in the euro-area economy threatens the U.K.’s expansion.

Officials left their benchmark at 0.5 percent this month and Carney said yesterday that “a benign global inflationary environment” would be a key factor for the path of policy. Sterling, which has appreciated nearly 7 percent in the past year, slipped as investors bet the data will support rates being left on hold further into next year.


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