RTTNews - U.K. annual inflation dropped below the central bank's target of 2% for the first time since September 2007, a report from the Office for National Statistics showed Tuesday. Annual inflation eased to 1.8% in June from 2.2% in May. From May, consumer prices rose 0.3%. Annual and monthly variations matched economists' expectations.

Core inflation that excludes energy, food, alcohol and tobacco was 1.6% in June, unchanged from the last month and in line with expectations.

Annual inflation measured by the Retail Prices Index, which includes housing costs such as mortgage interest payments and council tax dropped 1.6% compared to a 1.1% fall in May. This was the lowest RPI number since records began in 1948. The RPI stood at 213.4 in June versus 212.8 in May. Month-on-month, retail prices were up 0.3%. The RPI numbers also matched economists expectations.

Excluding mortgage interest payments, the retail price index rose 1%, slower than the 1.6% increase seen in May.

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