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  1. ITV Report

Inflation drops to 3.0% in December after six-year high

Falling price tags on clothes helped household finances. Credit: PA

The rate of Consumer Prices Index inflation fell to 3.0% in December, from 3.1% in November, the Office for National Statistics said.

The ONS said a drop in clothing and toy prices helped to ease financial pressure on households.

The 0.1% drop was from the highest the rate had been at in nearly six years - the last time it reached above 3% was in March 2012.

The outcome was in line with economists' expectations, who widely believe that Britain's soaring inflation has now peaked following sterling's collapse in the wake of the Brexit vote.

British consumers have been searching for a reprieve after taking a double-hit from a Brexit-fuelled jump in the cost of living and paltry wage growth.

Despite December's fall in CPI, everyday prices still rose more rapidly across the UK as a whole in 2017 than in France, Germany and the wider European Union.

The Sterling slipped against the US dollar following the announcement, falling 0.2% to 1.37. Against the euro, the pound was broadly flat at 1.12.

"Inflation has been running at roughly the same rate since last spring following significant increases, partly due to the weaker pound after the European referendum," senior ONS statistician James Tucker said.

"It remains too early to say whether today's slight fall is the start of any longer-term reduction in the rate of inflation."

Air fares, clothing and toys help downward pressure

Most of the downward pressure came from air fares, which counted for a smaller slice of the basket of goods and services in 2017.

It means the cost of air travel dragged on overall prices, despite growing by 52.8% month on month in December, compared with a 48.9% rise in 2016.

The cost of clothes also fell on the month by 1% in December, compared with a 0.9% drop for the year before, while games, toys and hobbies were down by 2.7% in contrast to a 1% fall for the same period last year.

Food and non-alcoholic drinks also recorded smaller monthly growth of 0.6%, down from 0.8% in December 2016.

The smaller expansion was partly driven by a fall in the cost of vegetables, including premium crisps.