The rate of inflation eased to 10.5%, according to official figures – down from 10.7% in November.

The Office for National Statistics (ONS) said fuel led to the decline in the core consumer prices index (CPI) measure of inflation.

Today’s announcement is the latest signal that the UK might have seen the worst of inflation. The number is down from a 41-year high of 11.1% recorded in October.

Economists polled by Reuters had expected a rate of 10.5% for the year up to December 2022.

Prices had been rising steadily since late 2021, when supply chain problems linked to COVID lockdowns and worker shortages meant demand for goods could not be met.

The problem was exacerbated by Russia’s invasion of Ukraine, when countries scrambled to find other energy sources and reduce their use of Russian gas, pushing up the cost of energy and all other goods that require energy input, as a result.

The slow decrease in inflation is not good news for borrowers, as the Bank of England will likely continue its programme of interest rate increases to bring inflation to its 2% target.

The Bank’s chief economist this month warned that inflation may prove to be more persistent in the UK than other countries.

While it is expected by financial markets that rates will peak at 4.25% in May, Mr Pill’s comments may signal willingness at the Bank to raise rates higher or for longer if inflation does not come down.