According to the office for National Statistics (ONS) the UK inflation dropped to 2.1% in December 2018 from 2.3% in November.
The Bank of England’s target of 2% could mean that there will be no rate rises in the future.
Mike Hardie, head of inflation at the ONS, 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.”
KPMG’s Chief Economist, Yael Selfin, said on today’s inflation figures, “Troubles on the high street and lower oil prices saw the price of goods fall in December, with overall CPI inflation rising by a mere 0.1% and taking the annual rate within a whisker of the Bank of England’s 2%, ahead of expectations.
“The latest inflation figures show the UK economy is further away from overheating despite low unemployment and a recovery in wages. Extended uncertainty over Brexit coupled with consumers’ and businesses’ reluctance to commit, means that prices are likely to remain subdued.
“This together with a lack of meaningful signs of accelerating inflation, should see the Bank of England keep interest rates on hold for the first half of this year at the minimum.”