UK inflation fell from 2.3% to 2.1% in December, approaching its lowest rate for two years, according to the Office for National Statistics (ONS).
The consumer prices index (CPI) fell to 2.1% in December as a result of downward pressure from petrol prices and air fares. This is the lowest figure since January 2017, when inflation was 1.8%.
Falling crude oil prices led to petrol prices reducing by 6.4 pence per litre between November and December 2018, compared with a rise of 0.8 pence per litre between November and December 2017. The price of petrol at the pump, in December 2018, was the lowest since April 2018.
This was somewhat offset by upward contributions from categories including accommodation, mobile phone charges, games and food.
Prices for overnight hotel accommodation rose by 0.9% between November and December 2018 compared with a fall of 3% for the same period in 2017 while prices for mobile phone charges rose by 0.1% between the two months compared to a fall of 3.6% in 2017.
ONS head of inflation Mike Hardie said: "Inflation eased mainly due to a big fall in petrol with oil prices tumbling in recent months. Air fares also helped push down the rate with seasonal prices rising less than they did last year. These were partially offset by small rises in hotel prices and mobile phone charges."
The steady fall towards the Bank of England's 2% target means the Bank's Monetary Policy Committee (MPC) is unlikely to make any interest rate hikes in the near term.
Capital Economics senior UK economist Ruth Gregory said: "With inflation within a whisker of its 2% target, the MPC will probably feel comfortable in waiting until Brexit uncertainty is resolved before moving again.
"The fall in CPI inflation from 2.3% in November to 2.1% in December was bang in line with the consensus forecasts (and our own). Note that the MPC predicted in December that CPI inflation would fall to 1.75% by January. So the committee's forecasts are on track."
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