UK inflation rate falls to 3 percent

The UK inflation rate fell to a nine-month low in January as a drop in fuel and housing costs eased pressure on prices while the recession deepened.

Consumer prices rose 3 percent from a year earlier, compared with a 3.1 percent pace in December, the Office for National Statistics said yesterday in London. The median of 31 forecasts in a Bloomberg survey was 2.7 percent. Prices fell 0.7 percent from December, the most since January 2008.

Inflation subsided as prices of fuel, home rents, food and drink fell. With interest rates approaching zero, Bank of England Governor Mervyn King says the bank may have to create money and pump it into the economy to keep inflation from falling too far below the 2 percent target.