CPI inflations drops at fastest rate in three years

CPI inflation fell to 4.2% during the month, down from 4.8% in November, according to figures released today by the Office for National Statistics (ONS).

The rate drop was attributed to a slowdown in petrol, gas and clothing prices with the only upward pressure coming from landline and mobile phone charges.

The last time there was as a large a fall, in December 2008, VAT had been reduced.

Retail Prices Index inflation, which includes mortgage interest payments, plunged from 5.2% in November to 4.8%, the largest annual fall since between May and June 2009.

The largest downward pressures affecting came from petrol, oil and other fuels along with clothing and footwear.

Clothing and footwear prices dropped by 2.8% over the period with the largest fall coming in women’s outerwear; meanwhile food prices rose 1.4%.

The largest upward contributors to inflation in the retail sector were car insurance and telephone charges.

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