The rate of inflation in the U.K. fell to 0.5 percent in December year-on-year, according to the Office of National Statistics (ONS) — its lowest level in 14 years.
Growth in U.K. consumer prices halved from November’s reading of 1 percent, and came in below forecasts of 0.7 percent.
In a strange practice, the governor of the Bank of England (BoE) will now have to write an open letter to the U.K.’s chancellor explaining why prices have declined below a prescribed level.
The Bank’s brief is to use monetary policy to keep the inflation rate – measured by the consumer prices index (CPI) – within a percentage point of the bank’s target of 2 percent.
As prices have fallen below 1 percent, BoE Governor Mark Carney will now have to write an open letter to Chancellor George Osborne. He will also have toexplain the period within which the bank expects inflation to return to within target and what action the bank’s Monetary Policy Committee intends to take to achieve this.