Inflation drops in UK, making interest rate rise this year increasingly unlikely



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LONDON — Official figures show that inflation in the U.K. eased further below the Bank of England's target in August following falls in food and fuel prices.

The Office for National Statistics says consumer price inflation slowed to 1.5 percent in August from 1.6 percent in July, a move that likely reinforces market expectations that interest rates are unlikely to rise this year despite robust growth and falling unemployment. Bank of England Governor Mark Carney has already signaled that rates won't start rising until spring next year.

Howard Archer of IHS Global Insight says the bank will likely "hold off from acting until February at the earliest."

Inflation has been below the bank's 2 percent target for eight months. In August, consumers benefited from declining gas prices and supermarket price wars.

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