UK inflation fell drastically in December to 4.2%, on the back of lower fuel and clothing prices.
According to data collected by the Office for National Statistics (ONS), this recent drop has seen the Consumer Prices Index (CPI) inflation fall from 4.8% in November to only 4.2% in December.
This is the largest monthly CPI fall since April 2009, and also the lowest the rate has been since June 2011.
The sudden drop has also been seen in terms of Retail Prices Index (RPI) inflation, which has also seen a fall from 5.2% to only 4.8% in the same period.
These records back up predictions made by the Bank of England (BoE), who has said that they believe inflation will fall, down to only 2% by late 2012.
This is a direct reflection of the 2.8% drop in the price of clothing and footwear by stores that was seen in the run-up to Christmas in an attempt to attract more customers.
Fuel prices also fell by 0.6% during the same month, however the cuts being made by the major gas and electricity suppliers is yet to take any effect on these figures.
However, not everything has fallen; food prices saw a rise of 1.4% during the last month, despite very strong competition between the market leaders in the run up to Christmas.
Chis Williamson, analyst for financial information service Markit, said: “Further falls are likely in coming months, reducing the squeeze on incomes seen last year and therefore providing a much-needed boost to economic growth in 2012.
“The data therefore add support to the Bank of England’s expectation that inflation will drop below its 2% target by the end of the year.”
With inflation set to fall to even more throughout 2012, it’s a good time to have a look into credit cards and other ways that could help you to make the most of the extra money that could be coming your way.
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