Inflation falls sharply - Business - ITN.co.uk Inflation has fallen steeply in December as fuel prices dropped and retailers discounted goods, allowing the Bank of England more leeway to ease policy further. Consumer price inflation fell to 4.2 per cent in December from 4.8 percent in November, the Office for National Statistics said on Tuesday, showing the decline in inflation from its three-year peak of 5.2 per cent in September is gathering pace. It was the sharpest drop in the annual rate since April 2009, when the economy was deep in recession. Economist Nida Ali said: "We expect inflation to be back at the two per cent target by this autumn, and - while we're not convinced that it will fall back as far as the Bank of England forecasts - there should still be plenty of room to loosen monetary policy further in 2012. This will also provide some welcome respite for hard-pressed families who have struggled with falling real wages for much of the past five years. Inflation is still well above the BoE's two per cent target, but the central bank forecasts that it will be below this by the end of 2012, as economic weakness weighs on prices and the effect of 2011's rises in sales tax and energy prices fade.