Inflation fell for a second month in a row in December to 10.5%, down from 10.7% in November, official figures show.
The drop was down to reduced costs for fuel and clothing but food prices still stood at a whopping 16.9% – the highest rate seen since 1977.
Despite the fall inflation still stands significantly above the Bank of England’s target of 2%.
Paul McGerrigan, CEO at fintech brokerage Loan.co.uk, said: “The rate of inflation has dipped for the second month in succession, bringing some relief and an increased hope that steps taken by the Government and the Bank of England are starting to take effect. Number one in Rishi Sunak’s five key priorities is to halve inflation in 2023, so we expect a laser focus on this goal to be driving future decisions.
“Inflation has caused a real terms decline in wages by 2.6% in the three months to November 2022, among the largest falls since comparable records began in 2001.
“Even with positive signs inflation is starting to drop – fuelled by lower energy costs and lower prices at the pumps – the bank’s Monetary Policy Committee has a critical decision to make on February 2nd, and it seems highly likely we’ll see a further increase in interest rates of 0.5%.
“This will hit households without a fixed mortgage and with high levels of unsecured debt even harder as costs rise. Are they going too hard too fast or is it a necessary measure to ensure inflation drops? One thing is for sure, now is the time for advisory firms to be agile, proactive and innovative with solutions to alleviate the challenges faced by borrowers.”
