Inflation falls in December

by Simon Ward on 17 January 2012  |  3 comments
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Petrol, gas and clothing contribute to fall from November to December.

Inflation fell in December, according to latest figures from the Office of National Statistics.

The Consumer Prices Index (CPI) measure has fallen from 4.8% to 4.2% month-on-month, while the Retail Prices Index (RPI) measure has fallen from 5.2% to 4.8%.

This is the biggest drop in inflaton since April 2009. The CPI is now at its lowest level since June 2011, although it's still well above the Bank of England's 2% target.

Petrol, gas and clothing prices were the main contributors to the drop.

Petrol was down by 1.1p per litre, while gas prices were stable from November to December. Clothing prices fell by 3.1%.

The cost of alcohol and tobacco also fell between November and December, with many supermarkets launching pre-Christmas drinks promotions. The price of New World red and white wines and European red wine has fallen over the past year, but European white wine and cider prices have increased.

Meat, fish, cheese and eggs are now cheaper than they were 12 months ago, but the cost of fruit and vegetables is increasing.

Meanwhile, landline and mobile phone charges and the cost of mobile apps increased between the two months.

Looking ahead, inflation is likely to fall further next month, with the January sales pushing down the cost of clothing, furniture and air travel. However, the effect of the recent round of energy company price cuts isn't likely to be felt until February's figure is released, as most don't come into effect until then.

More: Cheapest ways to borrow this January | How to stand the best chance of getting a mortgage

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