Unexpected drop in inflation lifts pressure off Rachel Reeves

UK chancellor has had tough week but latest figure sends yield of UK government bonds tumbling

Rachel Reeves has been handed breathing space after better-than-expected inflation figures raised expectations for a Bank of England rate cut and reduced UK borrowing costs.

After a tough week for the government on the economy, official figures showed inflation unexpectedly cooled in December to 2.5%, down from 2.6% in the previous month, meaning prices rose at a slower rate.