Economy latest: UK inflation rate falls to 2%

UK inflation, which is measured by the Consumer Prices Index, finally fell to its 2% target rate in December.

13:24 14 January 2014

The Office for National Statistics has revealed that UK inflation rate had fallen to a record 2% in December. This is the first time that the inflation has been at or below the target set by the government since 2009.

ONS stated that this was because of slower increases in prices of food in the country.

Prime Minister David Cameron was obviously happy with the 2% inflation target. He said: "It's welcome news that inflation is down and on target. As the economy grows and jobs are created this means more security for hard-working people.”

Economists said that the low inflation rate may affect Bank of England’s decision to increase interest rates following the recent recovery in the economy.

Jeremy Cook, chief economist at currency exchange specialists, World First, said: "The lack of inflation will help stay their hand especially if the pace of job creation seen in the second half of last year also slows."

Meanwhile, Chris Williamson, chief economist at Markit, said: "The easing in price pressures is a welcome relief to policy makers at the Bank of England and helps keep the spectre of higher interest rates at bay.”