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To: Les H who wrote (58890)	9/12/2000 6:53:56 AM
From: Haim R. Branisteanu	Read Replies (2) \| Respond to of 99985

Consumer Prices Remain Unchanged in August as Food, Energy Costs Decline By Michael Bleby London, Sept. 12 (Bloomberg) -- U.K. consumer prices were unchanged in August, as the cost of food, cars and fuel fell, easing pressure on the Bank of England to raise interest rates. The annual inflation rate slowed to 3 percent in August from 3.3 percent in July, the National Statistics office said. The main inflation measure tracked by the central bank, retail prices minus mortgage interest, fell 0.1 percent from July and rose 1.9 percent for the year, the slowest pace on record. ``It's going to be tough for the Bank of England to raise rates when inflation is this low,'' said Mark Ramsden, a U.K. economist at Stone & McCarthy Research. While the figures don't reflect the surge in oil prices to 10- year highs this month, they do show that increased competition in Europe's second-largest economy has held back inflation even as companies' costs rose. The inflation rate has undershot the central bank's 2.5 percent target for 17 straight months. The figures defied analysts' forecasts for an increase in prices and gave U.K. bonds a boost. The benchmark 10-year yield fell 1 basis point to 5.31 percent after the release. The Bank of England has held its benchmark interest rate at 6 percent since February. Interest-rate futures suggest investors are split on whether the bank will raise rates again this year. France, in a separate report today, said consumer prices rose 0.2 percent in August as the summer discounting season ended, leaving the annual inflation rate at 2 percent, a four-year high, based on European Union methods. Squeezed The pressure to hold down prices is being felt across the U.K. economy. The nation's largest employers' group said last week that prices fell in August at the fastest rate since July 1983. British companies with little pricing power are feeling the pinch as higher oil prices push up their costs. bloomberg.com