According to the report from Office for National Statistics, UK inflation sank unexpectedly to a more than three-year low in December as hotels slashed prices. The Consumer Prices Index (CPI) 12-month rate was 1.3% in December 2019, down from 1.5% in November 2019. Economists had expected a 1.5% increase.

The Consumer Prices Index including owner occupiers' housing costs (CPIH) 12-month inflation rate was 1.4% in December 2019, down from 1.5% in November 2019. The largest contribution to the CPIH 12-month inflation rate in December 2019 came from housing, water, electricity, gas and other fuels (+0.36 percentage points). The largest downward contributions to the change in the CPIH 12-month inflation rate between November and December 2019 came from accommodation services and clothing.

A separate report from the ONS showed that the headline rate of output inflation for goods leaving the factory gate was 0.9% on the year to December 2019, up from 0.5% in November 2019.

The growth rate of prices for materials and fuels used in the manufacturing process was negative 0.1% on the year to December 2019, up from negative 1.9% in November 2019.

Petroleum products made the largest upward contribution to the change in the annual rate of output inflation. Crude oil provided the largest upward contribution to the change in the annual rate of input inflation.