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Britain’s Inflation at 5-Year Low

June 15, 1999

LONDON (AP) _ A drop in the prices of seasonal and nonseasonal foods helped reduce Britain’s inflation rate to 2.1 percent in May, its lowest level in almost five years.

The rate was last lower in October 1994, the Office of National Statistics said Tuesday.

The inflation rate stood at 2.4 percent in April.

May’s rate is well below the government’s inflation target of 2.5 percent, and is likely to raise hopes of a further cut in interest rates, already at a 22-year low.

After its monthly rate-setting meeting last week, the Bank of England’s Monetary Policy Committee warned that inflation was falling below target rates.

The lower inflation rate was attributed to a drop in the prices of domestically produced fruit and vegetables, unaffected by shortages due to bad weather compared to last year.

The prices of soft drinks, sweets, and chocolates also were down.

The Bank of England has predicted that inflation will be slightly below the government’s targeted limit for much of the next two years.

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