Britain's inflation rate drops unexpectedly
Britain's inflation rate dropped unexpectedly to 2.8% in June but still remains above the British government's target rate of 2.5%.
Analysts had predicted a further rise to 3% from May's 2.9% and this surprise decrease lends weight to the argument that UK inflation had peaked.
Last week, the Bank of England decided to cut interest rates to 3.5%, their lowest rate in 48 years.
The reduction in price rises in the cost of foreign holidays and housing from the previous year were the main downward contributing factors according to figures released today by the Office for National Statistics.
The harmonised index of consumer prices (HICP) - the inflation indicator used in the Eurozone - fell to its lowest level since September 2002.
British chancellor of the exchequer Gordon Brown favours the HICP mechanism as he makes preparations for the UK's proposed entry to the single currency.
The Bank of England's inflation target of 2.5% is set to be revised and based on HICP from November this year.
