Source: Bloomberg.com

The U.K. inflation rate fell more than economists forecast in October, recording the steepest drop in at least 11 years and giving the Bank of England scope to cut interest rates further as the economy slides into a recession.

Consumer prices rose 4.5 percent from a year earlier, compared with 5.2 percent the previous month, the Office for National Statistics said today in London. The median forecast in a survey of 27 economists was 4.8 percent. The rate has now exceeded the bank’s 2 percent target for a 13th month.

Central bank Governor Mervyn King said last week that the economy is probably in a recession, and policy makers will cut borrowing costs as low as needed to stave off deflation. The bank forecasts inflation will slow below the government’s 1 percent lower limit unless it reduces the benchmark interest rate from the current 3 percent.

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