UK inflation falls to 5-year low amid supermarket price wars and lower gas prices

Economic Indicators Associated Press

U.K. authorities say inflation fell to its lowest point in five years, dropping to 1.2 percent in September as shoppers benefited from a supermarket price war and lower petrol prices.

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The Office of National Statistics said Tuesday the rate dropped 0.3 percent, down from 1.5 percent in August. Food and nonalcoholic beverages fell by 1.4 percent year-on-year, the sharpest decline since June 2002.

The report will further ease pressure on the Bank of England to raise interest rates. The bank's inflation target is 2 percent — and it's been below this level for nine months.

Chris Williamson, the chief economist of Markit, says the benign outlook "could even add to calls for policymakers to do more to shore up the recovery amid signs that growth could fade in coming months."