UK inflation steady in December

Last month's Consumer Prices Index figure - the government's preferred measurement - held at 2.1% for a third month in succession.

The biggest inflationary pressure was continuing high food prices, the Office for National Statistics (ONS) said.

The Retail Price Index inflation measurement, which includes mortgage interest payments, eased to 4% from 4.3% in November.

Rising energy bills

The biggest easing on inflation last month came from utility bills, which rose by less than they had a year earlier.

However, the ONS warned that this was likely to change in the coming months due to Npower's decision two weeks ago to raise its energy bills, and the expectation that other providers will follow suit.

There was also downward price pressure last month from reduced furniture prices, particularly for kitchen units and leather sofas.

The fact that inflation remained on hold in December will increase expectations that the Bank of England has the breathing space to cut interest rates to 5.25% in February.

After keeping rates on hold at 5.5% in January following December's cut from 5.75%, the Bank has faced repeated calls for an additional reduction, especially from retailers struggling with weak sales.

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