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British Inflation at 36-Year Low

September 14, 1999

LONDON (AP) _ Britain’s annual inflation rate fell in August to 1.1 percent, its lowest level in 36 years, the Office for National Statistics said Tuesday.

Good harvests for seasonal vegetables and lower clothing costs were among the main reasons for the decline, which was partially offset by higher gasoline prices. The year-to-year inflation rate was 1.3 percent in July.

The decrease in consumer prices is likely to reassure the Bank of England, which only last week raised a key lending rate in an effort to cool Britain’s surging housing market and other inflationary pressures.

The latest inflation figure is the lowest since July 1963, when the rate stood at 0.8 percent, the statistics office said. The peak inflation rate since that time, 26.9 percent, came in August 1975.

An adjusted measure of inflation _ the so-called underlying rate, which excludes mortgage interest payments _ was 2.1 percent in August, its lowest level since October 1994, the office said.

The underlying rate is the measure chosen by the government as the focus for its efforts to control inflation. The government’s targeted rate is 2.5 percent.

Underlying inflation was 2.2 percent in July.

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