UK inflation drops to 4.2%

UK CPI inflation fell from 4.8% in November 2011 to 4.2% last month, the largest drop since December 2008, according to the Office for National Statistics.

Economists had predicted the drop to 4.2% in part because of discounting by retailers ahead of the Christmas period. The fall, which was in line with forecasts, was driven by falling petrol, gas and clothing costs, the ONS said. RPI inflation also fell from 5.2% in November to 4.8% in December, slightly above the 4.7% that had been forecast but still the largest fall in annual RPI inflation since June 2009. The ONS said RPI figures were also driven down by falling petrol, oil & gas and clothing prices, but said rising car insurance fees and phone charges had partially offset such fall...