September 19, 2007	Wednesday	Ramazan 06, 1428

LONDON, Sept 18: British 12-month inflation slowed in August, official data showed on Tuesday, leading economists to predict that the Bank of England may soon look to cut interest rates.

Consumer Prices Index inflation cooled to an annual rate of 1.8 per cent in August, from 1.9 per cent in July, the Office for National Statistics (ONS) said.

It was the second month running that Britain’s annual inflation rate has stood below the Bank of England’s 2.0pc target.

Analysts’ consensus forecast was for inflation to remain at 1.9 per cent in August.

“With inflation tracking lower than expected, the BoE could now argue that rates should be lower, irrespective of what is happening in the banking sector or the money market,” Calyon economist Daragh Maher said.

Amid the economic fall-out of the ongoing worldwide credit squeeze, the Bank of England left British interest rates at 5.75pc at its monthly policy meeting on September 6.

The ONS said the largest downward contribution to inflation in August came from the falling cost of financial services, as some banks cut charges for customers ending their home loans following a government request.

“This required lenders to review their approach to these fees as there were concerns that consumers were being charged more than they had expected.”

Elsewhere, the ONS said British inflation rose by 0.4 per cent in August from July on a monthly basis, in-line with analysts’ consensus forecast.

Britain’s 12-month inflation rate had fallen by the biggest amount in more than five years during July.—AFP