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British inflation rate plunges to record-low 0.5%

[LONDON] Britain's annual inflation rate dived in December to 0.5 per cent, matching a record low on the back of sliding oil prices, official data showed Tuesday.

The 12-month Consumer Price Index (CPI) marked a sharp slowdown from 1.0 per cent in November, and equalled the record low set in May 2000, the Office for National Statistics said in a statement.

The rate, which was in line with expectations, was also pushed lower by flat domestic electricity and gas prices in December compared with a year earlier when they were hiked sharply.

"The main contributions to the fall came from the December 2013 gas and electricity price rises falling out of the calculation and the continuing drop in motor fuel prices," the ONS added.

The drop below 1.0-per cent meanwhile triggered a letter from Bank of England (BoE) governor Mark Carney to British finance minister George Osborne.

The BoE's chief task is to use monetary policy as a tool to keep 12-month inflation close to a government-set target of 2.0 per cent.

When inflation strays more than 1.0 percentage point either side of the target, Carney is required to write a letter of explanation to Osborne.