UK Aug CPI Falls To Lowest Annual Rate For 30 Mos

LONDON (Dow Jones)--U.K. consumer price inflation fell to its lowest annual rate for thirty months in August, casting further doubt on the need for any more interest rate hikes from the Bank of England this autumn.

The Office for National Statistics said Tuesday that annual CPI inflation was 1.8% in August, down from 1.9% in July.

The rate was also just below the 1.9% level expected by economists surveyed by Dow Jones Newswires last week.

On the month, the consumer price index was up 0.4%, compared with a fall of 0.6% in July. That was in line with expectations.

The annual rate of inflation was last lower in February 2005, when it was 1.7%. CPI inflation has now been lower than the BOE's 2.0% target rate for two months in a row.

That will further cement expectations that the central bank's Monetary Policy Committee won't see the need to raise interest rates for the rest of 2007, leaving bank rate at 5.75%.

The MPC had previously raised rates five times in the twelve months to August.

The ONS also said that the retail price index rose 0.6% on the month in August, and 4.1% on the year. The Dow Jones Newswires forecast was for it to go up 0.4% on the month and be at an annual rate of 4.0%.

In July the RPI fell 0.6% on the month and rose 3.8% in annual terms.

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