British inflation unexpectedly slowed last month to its weakest rate since July to possibly ease pressure on the Bank of England to raise interest rates again in the near future.
The Office for National Statistics said this morning the newly named consumer price index fell 0.1 per cent on the month to give an annual rate of 1.3 per cent, down from 1.4 per cent in October and compared with analysts' expectations of a rise to 1.5 per cent.
The CPI was formerly known as the harmonised index of consumer prices. The new rate is well below the Bank of England's new target of 2.0 .
Financial markets were quick to scale back expectations of interest rate rises. Short sterling interest rate futures rose three ticks and gilt yields dropped. Markets are now only pricing in interest rates of less than 4.75 per cent a year from now, compared with previous expectations of 5.0 .
The FTSE 100 share index was steady around 4,339 while the pound hovered around $1.747 and 70.6 pence to the euro.
The ONS said the drop was due to smaller rises in clothing and footwear prices than a year ago and due to lower prices for recreation and culture activities that include theatre tickets, games and toys and newspapers.