UK inflation still in letter-writing territory

British CPI inflation in the year to December was 3.1%, down a full percentage point from the November figure but still significantly above the Bank of England's 2% target.

The one percentage point change, reported by the Office for National Statistics, the government's statistics bureau, on Tuesday was largely a result of the government's 2.5 percentage point cut in Value Added Tax. The slump in petrol and diesel prices, other transport costs and sharper retail discounting also contributed.