Inflation falls to 2pc target for first time in four years

Inflation is finally at target.

Prices rose by just two per cent in the year to December, after inflation dropped from 2.2 per cent to 2.1 per cent in November. Analysts had expected no change.

Inflation had been above the Bank of England two per cent target every month since December 2009.

The largest contributions to the fall came from food and non-alcoholic drinks. Analysts had expected softening in that area after commodity values dropped last summer.

Much of last month's fall was due to lower petrol prices, which economists had expected to reverse in December.