A drop in the UK’s inflation rate in December suggests the post-Brexit hit to living standards may finally be easing.
The Office for National Statistics reported on Tuesday that consumer price inflation was 3 per cent in the month, down from the 3.1 per cent in November.
It was the first fall in the rate since June.
Inflation rose rapidly in the wake of the June 2016 Brexit vote due to the record slump in sterling on the night of the referendum, which fed through to higher import costs.
The squeeze on the cost of living curbed disposable income growth and helped deliver a slowdown in the wider economy in 2017.
But the trade-weighted value of the pound is up almost 5 per cent since last August and many analysts expect inflation to peak at around 3 per cent.
"The fall-back in CPI inflation marks the beginning of what we expect will be a sustained downward trend over the course of this year," said Paul Hollingsworth of Capital Economics.
However, the ONS was cautious about saying the inflation hit had definitely peaked.
“It remains too early to say whether today’s slight fall is the start of any longer-term reduction in the rate of inflation,” said James Tucker of the ONS.
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