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| Version 1 | Version 2 |
|---|---|
| Inflation falls on food price war | Inflation falls on food price war |
| (10 minutes later) | |
| A supermarket price war helped the UK's rate of inflation to fall to 1.9% in July, well below analysts' forecasts. | A supermarket price war helped the UK's rate of inflation to fall to 1.9% in July, well below analysts' forecasts. |
| The Consumer Price Index dropped sharply from June's level of 2.4%, raising hopes that further rises in interest rates will not be needed. | The Consumer Price Index dropped sharply from June's level of 2.4%, raising hopes that further rises in interest rates will not be needed. |
| It is the first time UK inflation has fallen below the government's target of 2% since March 2006. | It is the first time UK inflation has fallen below the government's target of 2% since March 2006. |
| The Retail Price Index, a measure often used in wage bargaining, fell to 3.8% in July from 4.4% the previous month. | The Retail Price Index, a measure often used in wage bargaining, fell to 3.8% in July from 4.4% the previous month. |
| Interest rate peak? | |
| "This is a massive surprise," said Howard Archer, chief UK and European economist at Global Insight. | "This is a massive surprise," said Howard Archer, chief UK and European economist at Global Insight. |
| "Consumer price inflation fell back far more than anyone was expecting in July, including, we strongly suspect, the Bank of England. | |
| "This will boost expectations that interest rates have peaked at 5.75%, especially as the current turmoil in global credit and financial markets further dilutes the case for higher interest rates, for now at least." | |
| The news caused the pound to fall below the $2 level, where it has been trading recently. | |
| Speculators considered the possibility that the Bank of England would reconsider raising interest rates one more time to rein in inflation, as it had previously suggested it might. | |
| Higher interest rates give currency investors better income and vice versa. At 0840 GMT, one pound traded at $1.999, down from $2.008 before the data was released. |