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Osborne: Let's celebrate effects of low inflation not fear them

Britain could experience negative inflation over the coming months without any significant risk to the economy, the Chancellor is expected to say.

In a speech to the Royal Economic Society, George Osborne will say the slump in the headline rate to just 0.5% is due to external factors - and that the benefits for consumers should be celebrated.

Bank of England Governor Mark Carney told ITV News that deflation in the UK is "possible," but is a risk that can be managed,

He was speaking after inflation fell to just 0.5%,which was welcomed by David Cameron as "fundamentally good news" for household budgets.

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Full interview: Mark Carney on UK's inflation outlook

The inflation rate is now down to just 0.5%, meaning Bank of England governor Mark Carney must write to the Chancellor explaining the situation.

Watch Mr Carney speaking to ITV News Business Editor Joel Hills about why inflation is so low and the prospects for the British economy.

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