Inflation hits 2pc target

This is the first time the rate has been, at or below, the bank’s target since November 2009, when the index stood at 1.9%.

Charlotte Watson, chief investment officer at Attivo Investment Management, said: “It takes the pressure off Mark Carney and the Bank of England to raise interest rates in the immediate future.

“Although inflation is falling, wage growth in the economy still remains sluggish and below inflation levels which continues to apply pressure on household budgets and disposable incomes, however as the labour market strengthens this should begin to gain pace.”

The drop was mainly due to the price drop in food and non-alcoholic drinks being down to 12.16% in December from 14.76% in November.

This offset an increase in energy and petrol costs, a significant contributor to inflation, according to the Office for National statistics.