Inflation fell for the fourth month in a row in January, new figures from the CPI show. The inflation rate fell to 3.6%, down from 4.2% in December as the impact of last year's VAT rise dropped out of the year on year comparison. In terms of month-on-month rates of change, prices in recreation & culture, education and restaurants & hotels remained flat, while food prices fell by 0.4%. Prices of alcohol and tobacco rose by 1.9%, along with those of housing and household services (0.2%) and health (0.7%). The headline rate has been declining since hitting a three-year high of 5.2% in September and is expected to continue to fall through much of 2012. Last week's decision by the Monetary Policy Committee to start a new round of quantitative easing was driven by concerns that the inflation rate could drop below the Bank of England's 2% target.

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