UK inflation fell to 2.1% in December, from 2.3% the previous month, according to the Office for National Statistics (ONS).

Consumer Prices Index (CPI) inflation was at the lowest level in nearly two years, pushed down by lower petrol prices.

The figure was in line with analysts' expectations and is close to the Bank of England's target of 2%.

Mike Hardie, head of inflation at the ONS, said: “Inflation eased mainly due to a big fall in petrol, with oil prices tumbling in recent months.

“Air fares also helped push down the rate, with seasonal prices rising less than they did last year. These were partially offset by small rises in hotel prices and mobile phone charges.

“House price growth was little changed in the year to November, with buoyant growth across much of the UK held back by London and the South East.”

Kate Smith, head of pensions at Aegon, said: “For now, today’s figure will be a welcome relief from the inflationary squeeze on incomes a year ago and while we experience a period of falling inflation and wage growth, individuals should look to develop a saving habit so that any increase in disposable income can be put towards a long term savings vehicle.

“Just a small increase today will prove extremely beneficial to any future savings.”