Chancellor: Low inflation not a threat

The sharp fall in the UK inflation rate is not cause for concern, Chancellor George Osborne will say in a speech later today.

The speech comes a day after official figures showed the UK inflation rate had fallen to 0.5% in December - its lowest rate since May 2000. Some economists have suggested the UK could experience a period of deflation this year. Mark Carney, the Governor of the Bank of England, told the BBC after the figures came out: "We will expect it to fall further, and inflation to continue to drift down in the coming months." In a separate interview, Carney told ITV News that deflation is now "possible". But in extracts from the speech released by the Treasury, Osborne tries to distance the UK...