Inflation falls to 12-year low

We could soon join our European neighbours in being at risk of deflation, after last month’s figures show inflation fell to just 1% - a 12-year low for the UK.

For the year to November, prices of goods and services rose just 1%, compared with 1.3% for the year to October.

In the last 10 years, the rate of inflation, measured by the Consumer Prices Index, has been mostly 2-4%.

However, throughout 2014, it has remained below 2%, possibly signalling slower growth.

The Office for National Statistics, which compiles the monthly figures, said cheaper food and fuel prices had contributed to the record low.

Food prices dropped by 1.7% as many supermarkets focused on cutting prices to compete with their rivals.

Petrol prices fell 5.9% in November, due to historically low oil prices, which brought down the cost of air and road travel.

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