By Jonathan Davies

The UK rate of inflation, as measured by Consumer Prices Index (CPI), fell to 1% in November, the Office for National Statistics (ONS) has revealed.

It is down from the 1.3% figure reported in October, and represents the lowest level for 12 years. The last time inflation was lower than 1% was in June 2002, when it was 0.6%.

The ONS said there were price falls across the board, but there were particularly strong drops in transport costs. Falling oil prices have driven down the cost of petrol and there were also falls in air transport costs and second-hand cars.

Foods prices were also down in November which provides a stark contrast to normal trends. Inflation is usually pushed up by things like fuel and food.

John Allan, National Chairman of the Federation of Small Businesses (FSB) said: “The continued fall in inflation, coupled with the recent marked falls in oil prices, again lends support to the view that it will be some time before interest rates will rise.

"Small firms will welcome this, as it should encourage their investment and expansion plans. For their employees, the fall will clearly help wage packets go further and support much needed real wage growth especially for those on lower incomes.”

The governor of the Bank of England Mark Carney recently admitted that he would have to write to the Chancellor George Osborne when inflation fell below 1% to explain why it was less than half of the target, which is 2%. At the time, Mr Carney acknowledge that it would be a case of 'when' he had to do it, rather than 'if'.

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