UK inflation touches two-year low on sliding oil price

18 January, 2019 12:00 AM printer

LONDON: British annual inflation slowed in December to a two-year low on falling motor fuel and oil prices, sitting just above the Bank of England's target, official data showed Wednesday.

The Consumer Prices Index 12-month rate declined to 2.1 percent last month from 2.3 percent in November, the Office for National Statistics (ONS) said in a statement, report agencies.

The December reading was the lowest level since January 2017 and matched market expectations.

The rate was also a whisker away from the Bank of England's official target level of 2.0 percent.

"Inflation eased mainly due to a big fall in petrol, with oil prices tumbling in recent months," said Mike Hardie, head of inflation at the ONS.

"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 average cost of petrol slid 6.4p per litre on the month to 121.7 pence, which was the lowest since April 2018.

The Bank of England is meanwhile tasked with using monetary policy as a tool to keep 12-month UK inflation close to 2.0 percent.

Last month the BoE voted to keep its main interest rate at 0.75 percent, as it warned over "intensified uncertainties" surrounding Brexit.

British Prime Minister Theresa May will face a confidence vote later Wednesday, after MPs overwhelmingly rejected her deal on Britain leaving the European Union.