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Inflation drops to 12-year low as oil prices drag

The rate of inflation in the UK dropped to its lowest level for 12 years thanks to the impact from falling transport and food prices.

The latest data from the Office for National Statistics showed the rate of annual inflation was 1 per cent in November, down from 1.3 per cent in October.

The biggest factor behind the drop in the inflation rate was a drop in the price of transportation, which fell by 1.2 per cent compared to October, driven at least in part by the falling oil price.

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Food and alcohol continued to be a drag on prices as well, with the cost of alcohol in particular falling by 1.2 per cent compared to a 0.1 per cent drop last year.

Data out earlier today from consumer panel Kantar Worldpanel UK found that, from its analysis of supermarket sales, grocery prices had fallen by 0.7 per cent, which it attributed to a price war in supermarkets.