Declining fuel prices drive inflation to 12-year low

DECLINING fuel prices have helped to reduce the rate of inflation to 1% – its lowest rate since 2002, latest figures have shown.

The Office for National Statistics said the Consumer Prices Index (CPI) grew by 1% in the year to November 2014, down from 1.3% in October.

Falls in transport costs – notably for motor fuels, air transport and second-hand cars – were the main factors influencing the fall. Prices of recreational and cultural goods also contributed to the fall, according to ONS data.

Food and motor fuel prices, which have historically been upward contributors to the CPI rate, are currently reducing it by 0.4 percentage points, said the statistics body.

In the year to November 2014, food prices fell by 1.7% and prices of motor fuels fell by 5.9%. Historically, these prices have been among the main causes of inflation, though this has changed over the latest year. Along with audio-visual equipment, these product groups provided the largest downward contributions to the 12-month rate for November.

The rate was last lower than this in June 2002 when it was 0.6%.