Fuel price fall reduces inflation

Motoring costs have plummeted as fuel prices fell at their fastest rate on record, dragging down inflation in the UK.

In January, the annual rate of inflation fell to its lowest level since April 2008, official figures show.

The Office for National Statistics (ONS) revealed that falling car and transport costs acted as a drag, causing the Consumer Prices Index (CPI) measure of inflation to drop from 3.1% in December to 3% in January.

Annual fuel inflation has reached minus 15.2%, its lowest level since the ONS began recording data in 1997. This has been caused by sinking oil prices. The ONS revealed the average price of petrol fell by 2.9p a litre to 86.3p between December and January, although this trend has started to reverse.

Recent hefty reductions in interest rates have also ragged down Retail Prices Index (RPI).

RPI inflation - which includes mortgage costs - showed a much larger fall, plunging from 0.9% in December to 0.1% in January, its lowest level since March 1960.

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