The Consumer Prices Index (CPI) 12-month rate fell to 1.3 percent in December 2019, the lowest in three years, down from 1.5 percent of the previous month, Britain's Office for National Statistics (ONS) said Wednesday.
"Inflation eased in December as prices for hotel stays dropped. Women's clothing prices also fell with more items being discounted," said Mike Hardie, head of inflation at the ONS.
The inflation rate, which is below the Bank of England's target of 2 percent, has increased speculation that interest rates could be cut, local media reported.
"Very soft UK inflation data for December leaves the door wide open for a Bank of England rate cut on 30 January," Melissa Davies, an economist at stock broker Redburn, was quoted by the BBC as saying.
However, Yael Selfin, chief economist at KPMG UK, warned on the Evening Standard newspaper that "lower rates represent a significant burden to the banking and insurance industries, as well as to pensions ... a rate cut is unlikely to stimulate growth."
Meanwhile, the Consumer Prices Index including owner occupiers' housing costs (CPIH) 12-month inflation rate dropped to 1.4 percent in December 2019, down from 1.5 percent in November 2019, said the ONS report.