LONDON: Inflation dropped to 12-year low due to the weakening oil price. Inflation has seen a dramatic fall, dropping to its lowest level since September 2002.
Consumer prices fell to 1pc in the year to November, from 1.3pc last month.
The decline was driven by large decreases in transport costs, especially for motor fuels, air transport, and second-hand cars, the Office for National Statistics (ONS) said.
“Pump prices have been falling this year with changes in oil prices reported as one possible factor behind this”, the ONS said.
The price of a barrel of Brent crude fell below $60 on Tuesday, for the first time since 2009. The fall represents a decline of nearly 48pc since June.
Food and motor fuel prices – both of which have historically provided upward pressure on inflation – reduced it by 0.4 percentage points this November.
At just 1pc in November, inflation was below the Bank of England’s target of 2pc.
Speaking at a press conference, Mark Carney, the Bank’s Governor, said that the fall in oil prices is “unambiguously net positive” for the UK economy.
It will “flow quite quickly through to consumers”, he added.
The fall in price growth puts Mr Carney close to having to write a letter to George Osborne, the Chancellor, to explain why inflation has drifted so far from target.
Core inflation – a measure intended to strip out volatile components including energy – fell by 0.3 percentage points to 1.2pc in the year to November.
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