According to a new report from the Office for National Statistics, UK inflation fell to a 20-month low in November.
The fall was achieved by a sharp fall in oil prices, as well as a growth in consumer prices by 2.3% – down from 2.4% in October.
Prices for food, computer games and concert tickets also dipped in November.
Analysts have predicted that prices in oil could continue to fall, forcing inflation even lower.
Howard Archer, an analyst at EY Item Club, said: “Inflation should trend down over the first half of 2019. The recent falling back in oil prices should increasingly impact, while Ofgem’s price cap will put some downward pressure on domestic energy prices in January.”
Prices in petrol fell by 2.6 pence per litre between October and November.
PwC economist Mike Jakeman said: “Inflation returning towards the Bank of England’s 2% target is good news for workers, who are receiving the dual benefit of accelerating wages and slowing inflation, pushing up their income growth in real terms.”
Upward pressures also came from the rise in tobacco prices, which increased following the Budget. Other upward pressures included clothing prices, hotels and restaurants.
Mike Hardie, the ONS head of inflation, said: “Inflation was little changed as falling petrol prices, thanks to a substantial drop in the cost of crude oil, were offset by rises in tobacco prices following the duty changes announced in the Budget.”
“House price growth continued to slow with the smallest annual rise seen in over five years, led by price falls across London.”
The Bank Of England had forecast a CPI rate of 2.5% for October and November. Analysts are betting a rise next year amid Brexit uncertainty.
This week, the British Chambers of Commerce forecast that economic growth in 2018 and 2019 would be the slowest since the 2009 recession.