UK inflation rate falls to 2%, hits target first time since November 2009

For the first time since 2009, the rate of consumer price index (CPI) inflation fell to the Bank of England’s 2% target in December, down from 2.1% in November.

Figures released by the Office of National Statistics today alsoo show that UK house prices rose by 5.4% in the year to November, down from 5.5% in October.

The rise in UK house prices was driven by an 11.6% rise in London.

Here are the key highlights announced by the Office of National Statistics today:

Consumer Prices Index

  • The Consumer Prices Index (CPI) grew by 2.0% in the year to December 2013, down from 2.1% in November.
  • The largest contributions to the fall in the rate came from prices for food & non-alcoholic beverages and recreational goods & services. These were partially offset by an upward contribution from motor fuels.
  • The overall price increase for gas and electricity in December 2013 was slightly larger than the rises a year earlier resulting in a small upward contribution to inflation.
  • CPIH grew by 1.9% in the year to December 2013, unchanged from November. RPIJ grew by 2.0%, also unchanged from November.

House prices

  • In the 12 months to November 2013 UK house prices increased by 5.4%, down from a 5.5% increase in the 12 months to October 2013.
  • The year-on-year increase reflected growth of 5.6% in England, 5.4% in Wales, 2.5% in Scotland and 3.3% in Northern Ireland.
  • House price growth is beginning to increase strongly across parts of the UK, with prices in London increasing at more than double the UK average.
  • Annual house price increases in England were driven by rises in London (11.6%), the South East (4.5%) and the West Midlands (4.4%).
  • Excluding London and the South East, UK house prices increased by 3.1% in the 12 months to November 2013.
  • On a seasonally adjusted basis, average house prices increased by 0.5% between October and November 2013.
  • In November 2013, prices paid by first-time buyers were 6.4% higher on average than in November 2012. For owner-occupiers (existing owners), prices increased by 5.1% for the same period.
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