U.K. consumer prices fell to the lowest level in three years in December, adding more pressure on the Bank of England to cut interest rates, data from the Office for National Statistics showed Wednesday.
The CPI inflation measure saw a retreat to 1.3 percent rise in the year ended December, the lowest since November 2016, compared to both prior and forecasts of 1.5 percent.
“Inflation eased in December as prices for hotel stays dropped. Women’s clothing prices also fell with more items being discounted,” the ONS said.
The data indicated that inflation took steps further below the Bank of England’s 2 percent target, so it is more likely to see an interest rate cut soon.
it “will be appropriate to maintain an expansionary monetary policy stance and possibly to cut rates further, in order to reduce risks of a sustained undershoot of the 2 per cent inflation target,” Michael Saunders, a member of the Monetary Policy Committee, said on Wednesday.
The annual core CPI reading also decelerated from 1.7 percent in November to 1.4 percent in December.
As of 10:04 GMT, the pound traded lower higher versus the U.S. dollar at
1.2993, resuming its drop from top of 1.3514 recorded on December 13, 2019.