Inflation in Britain was lower than expected in July, making it less likely that interest rates will be put up by the Bank of England this year.
Consumer prices rose 1.6 percent from July last year.
In June they were at their highest in five months at 1.9 percent.
Until last December, annual inflation had repeatedly exceeded the Bank of England’s 2.0 percent target every month, eroding Britons’ spending power.
Lower inflation helps the UK central bank to hold off on raising the cost of borrowing, despite Britain’s surprisingly strong economic recovery.
Some economists pushed back their expectations for the BoE’s first rate increase, to February 2015 instead of November 2014, after the central bank last week slashed its forecasts for wage growth this year.
Sterling fell to a four-month low against the dollar in response to the inflation statistics.