The rate of inflation in the UK plunged to 0.5 per cent in December, its lowest rate for nearly 15 years.
The inflation rate fell from 1 per cent in November largely due to the collapse in the price of oil, which has fed through into lower electricity and fuel prices for UK consumers.
It is the lowest inflation reading since May 2000 as even during the financial crisis UK inflation bottomed at 1.1 per cent.
The biggest downward pressure on inflation came from the housing and household services sector, which contributed -0.32 per cent to the figure, mainly due to falling gas and electricity prices.
Transport costs declined 0.18 per cent due to the fall in the price of oil, contributing to the fall in inflation.
The main upward price trends came from the alcohol and tobacco sector and recreation and culture.
Paul Hollingsworth, UK economist at Capital Economics, said UK inflation should fall to a record low of 0.2 per cent in the coming months gven the further fall in the oil price since December.
He said: “And given uncertainties surrounding how quickly and to what extent lower oil prices will cause price rises for other goods to moderate, a brief period of deflation is not entirely out of the question.”
