UK inflation rate slips to 3%, the first fall for six months

Squeeze on households eases slightly as effects of weak pound start to wane

The squeeze on British household budgets showed signs of easing in December as the rate of inflation fell for the first time in six months, helped by lower airfare costs and a fall in the price of games and toys.

The consumer price index fell to 3% last month from a five-year high of 3.1% in November, raising the prospect that inflation may have peaked, easing some of the pressure on UK consumers. Economists had expected the rate to moderate as the effects from the fall in sterling since the Brexit vote - which pushed up the cost of importing food and fuel - begin to wash out of the system.

Inflation is when prices rise. Deflation is the opposite - price decreases over time - but inflation is far more common.