UK inflation rate drops to 2.2%

Britain's inflation rate dropped sharply to 2.2 percent in October from 2.7 percent in the previous month, according to official figures released on Tuesday. The official Consumer Prices Index (CPI), a main gauge of inflation, issued by the Office for National Statistics (ONS) showed that the CPI grew by 2.2 percent in the year to October, which was largely driven by a fall in transport, especially motor fuels, and student tuition fees. The 2.2 percent inflation rate has beaten the previous market forecast of 2.5 percent and is the lowest since September 2012. According to the ONS statistics, transport prices fell by 1.5 percent between September and October of this year compared with a smaller fall of 0.1 percent between the same two months in 2012. "Within the transport sector, the main downward contribution came from prices for motor fuels with reports of price cuts at many of the major supermarket chains on the back of decreases in wholesale prices," the ONS said. Petrol prices fell by 4.9 pence per litre between September and October year on year to stand at 131.6 pence. Diesel prices fell by 2.9 pence per litre in the period to stand at 139.0 pence. There were also notable downward contributions from air fares and prices for second hand cars. Education prices rose by 8.2 percent between September and October compared with a rise of 19.1 percent between the same two months last year. The downward contribution came principally from UK and EU student tuition fees. The CPI figures is believed to ease pressure on the Bank of England (BOE), the central bank, to raise interest rates. The BOE is now striving to use monetary policy as a tool to keep annual inflation close to a government-set target of 2.0 percent, in order to preserve the value of money. However, the annual CPI rate has held above this target level since November 2009.