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UK inflation down in December

UK underlying inflation fell in December to 2 per cent, compared to 2.2 per cent in November, increasing pressure on the Bank of England to cut interest rates.

The Bank of England&#39s target rate for underlying inflation, which excludes mortgage rates, is 2.5 per cent. The UK now has the lowest inflation rate in Europe.

The business community and unions are likely to press for a rate cut as fears grow of a hard landing for the US economy. But some commentators believe that strong growth in the UK economy will discourage the Bank of England from making a cut.

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