According to the latest figures released, the annual inflation fell to the level of 2 per cent during the month of December as the central bank kept its interest rates at a lower rate.

The total inflation has fallen from 2.9 per cent in June and fell to the level of 2 per cent will give the Bank of England scope to continue to hold UK base rates at their record low of 0.5 per cent.  Experts believed that the monetary policy committee (MPC) would keep the Bank's benchmark interest rate at 0.5 per cent as per its forward guidance policy.  The policy, initiated by governor, Mark Carney, states that the central bank will keep its rates at record low levels until unemployment falls to seven per cent or below.

Prime Minister David Cameron said that it is a good sign that the inflation has fallen again in the country making it easier for households.  Bank of England governor Mark Carney said that the inflation has fallen to levels that are near the target of two present indicating that the UK economy has recorded strong recovery.  He also said that the growth rate is still lower and it will be some time for the central bank to consider withdrawing stimulus in the UK.