The UK inflation rate fell to 2.1% in December, down from 2.3% in November, according to the Office for National Statistics. The rate is at its lowest in nearly two years, which is in line with analysts’ expectations.
The ease in inflation has been caused by a big fall in petrol prices with oil prices tumbling in the past few months. Hitting the lowest prices since April last year, the price of petrol fell by 6.4p per litre to 121.7p, while diesel fell by 4.6p to 131.9p, the weakest since July 2018.
However, these rates were offset by upward contributions coming from a number of different areas and products including accommodation services, games, hobbies and food.
The current rate is close to the Bank of England's target of 2% and may mean they are less likely to raise any interest rates in the foreseeable future. The prediction is that a rate rise won't happen before November, and partially to blame for that is Brexit-related uncertainty. This is because many consumers are reigning it in and businesses are holding back on new investment.
While the inflation rate declines, wage growth (excluding bonuses) is increasing and was up to 3.3% for the three months to October 2018.