• Annual CPI inflation in December 2014 was 0.5%, a historically low level, down from 1.0% in November 2014
  • The main contribution to the fall was the December 2013 increases in gas and electricity rises, which fell out of the annual calculation, and from the continuing fall in motor fuel prices
  • Goods price inflation in December 2014 was minus 1.0% while services inflation was 2.3%

Commenting on the CPI inflation figures for December 2014 published today by the ONS, David Kern, Chief Economist at the British Chambers of Commerce said:

“The historically low inflation figure in December 2014 confirms that inflationary pressures in the UK are very low. Although the fall between November and December was exaggerated by the increase in gas and electricity prices a year ago, it is likely that CPI inflation will remain below 1% in 2015.

“However concerns over deflation pressures are grossly exaggerated and risk undermining business confidence. These figures show that inflation in the services sector – which accounts for some 80% of the UK economy – remains persistently above 2%.

“The main factor which counts for the low level of goods inflation, the fall in energy and goods prices, is positive as it boosts consumers’ disposable income and makes it easier for businesses to devote resources to investment. On the basis of current trends we believe that the MPC can afford to wait until 2016 before considering a rate rise.”