Inflation has rolled back from a near six-year high, as falling price tags on clothes and toys helped ease the pressure on household finances last month.
Figures from the Office for National Statistics (ONS) show the Consumer Prices Index (CPI) fell to 3% in December, down from 3.1% in November when inflation reached its highest level since March 2012.
The outcome was in line with economists’ expectations, who widely believe that Britain’s soaring inflation has now peaked following sterling’s collapse in the wake of the Brexit vote.
British consumers have been searching for a reprieve after taking a double-whammy hit from a Brexit-fuelled jump in the cost of living and paltry wage growth.
Despite December’s fall in CPI, everyday prices still rose more rapidly across the UK as a whole in 2017 than in France, Germany and the wider European Union.
Sterling slipped against the US dollar following the announcement, falling 0.2% to $1.37. Against the euro, the pound was broadly flat at 1.12.
“It remains too early to say whether today’s slight fall is the start of any longer-term reduction in the rate of inflation.”
The lion’s share of the downward pressure came from air fares, which counted for a smaller slice of the basket of goods and services in 2017.
It means the cost of air travel dragged on overall prices, despite growing by 52.8% month on month in December, compared with a 48.9% rise in 2016.
The cost of clothes also fell on the month by 1% in December, compared with a 0.9% drop for the year before, while games, toys and hobbies were down by 2.7% in contrast to a 1% fall for the same period last year.
Food and non-alcoholic drinks also recorded smaller monthly growth of 0.6%, down from 0.8% in December 2016.
Meanwhile, tobacco prices were applying upward pressure on prices in response to tax increases announced in the Autumn Budget.
The price lifted by 2.7% month on month in December, compared with a 0.2% rise for the same period in 2016.
At the pumps, motorists were also facing higher fuel costs last month, with petrol up by 0.8p per litre on the month to 119.9p per litre.
Diesel also rose by 0.7p to 123.5p.
The Retail Prices Index (RPI), a separate measure of inflation, was 4.1% last month, up from 3.9% in November.
The Consumer Prices Index including owner-occupiers’ housing costs (CPIH) – the ONS’ preferred measure of inflation – reached 2.7% in December, down from 2.8% for the month before.