BoE’s King-inflation could fall below 1 pct in 2009

British inflation could fall below one percent next year, Bank of England Governor Mervyn King said on Tuesday in a letter to the government explaining why prices were rising by more than double the official target.

Inflation eased to 4.1 percent in November from 4.5 percent in October, but that is still well above the governent's two percent target and required King to explain what action the Bank of England plans to take to bring it back on track.

King said inflation is now likely to fall sharply and there was actually a substantial risk that it could fall below the target next year, requiring him to a write a letter explaining why it had fallen so low.

"It is possible that I will not need to write a further open letter to you in three months time," King wrote to finance minister Alistair Darling.

"Indeed, given the short term outlook for inflation, it is quite possible that I will next need to write to you to explain why inflation has deviated by more than one percentage point below the target in 2009."

King said the outlook for activity had deteriorated since the BoE's November forecasts but the fall in sterling and market interest rates should support the outlook for activity and inflation.