UK inflation falls to lowest rate on record, slowing to 0.5 percent amid falling oil prices

IndustriesAssociated Press

U.K. inflation has slowed to its lowest rate on record, falling 0.5 percent in December.

The drop in the rate will force Bank of England Governor Mark Carney to write a letter to Treasury chief George Osborne, explaining why consumer price inflation is over a percentage point below the bank's 2 percent annual target. The rate has been below the target since the start of 2014.

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The Office of National Statistics said Tuesday falling oil prices kept inflation down.

The muted rate means there is little pressure on the Bank of England to raise interest rates from their record low 0.5 percent.

Paul Hollingsworth, of Capital Economics, said inflation looked likely to fall further — to 0.2 percent in February — and that an outright drop in prices was possible.