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UK Inflation At 32-Month Low

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UK consumer price inflation eased to a 32-month low in August as computer games and clothing turned cheaper, data from the Office for National Statistics showed Wednesday.

Consumer price inflation eased to 1.7 percent from 2.1 percent in July. The rate was forecast to ease moderately to 1.9 percent.

This was the lowest rate since December 2016 and well below the central bank's 2 percent target.

The decline was driven mainly by a decrease in computer game prices, plus clothing prices rising by less than last year after the end of the summer sales, ONS Head of Inflation Mike Hardie said.

On a monthly basis, consumer prices gained 0.4 percent in August, slightly slower than the expected 0.5 percent.

Data showed that core inflation that exclude prices of energy, food, alcoholic beverages and tobacco, slowed to 1.5 percent from 1.9 percent in July.

The Bank of England is set to announce the outcome of its monetary policy decision on September 19. The bank is widely expected to maintain its interest rate at 0.75 percent and quantitative easing at GBP 435 billion.

Another report from ONS showed that input prices declined for the first time since mid 2016 on crude prices. Input prices declined 0.8 percent on year in contrast to a 0.9 percent rise in July.

On a monthly basis, input prices dropped 0.1 percent reversing July's 0.6 percent increase.

Output price inflation eased to 1.6 percent from 1.9 percent a month ago. The annual rate has remained positive since July 2016. Transport equipment provided the largest upward contribution to the annual rate of output inflation.

Month-on-month, input prices dropped 0.1 percent after rising 0.3 percent in July.

Separately, the ONS said average house prices increased 0.7 percent in July, the lowest annual rate since September 2012. Prices had increased 1.4 percent in June.

On a monthly basis, average house prices decreased 0.3 percent in July.

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