Inflation falls to six-month low of 4.2% The weak buying power of consumers is behind the fall in inflation, economists believe. Photograph: Justin Tallis/AFP/Getty Images Inflation fell at the fastest rate in three years in December, to a six-month low of 4.2%, raising hopes that the squeeze on hard-pressed households' living standards will start to abate in 2012. The Bank of England has long predicted that inflation would fall rapidly as weak demand from shoppers forces retailers to cut prices. Official figures show that annual inflation was 4.2% in December, down from 4.8% in November, and a full percentage point lower than its peak in September. The last time there was such a large fall in the inflation rate from one month to another was in December 2008, when Alistair Darling's emergency VAT cut was introduced at the height of the world financial crisis. Chris Williamson, chief economist at information provider Markit, said: "Further falls are likely in coming months, reducing the squeeze on incomes seen last year and therefore providing a much needed boost to economic growth in 2012." The fierce downward pressure on workers' buying power over the past twelve months, from weak wage growth and rocketing prices, was one of the key reasons the economy was far weaker than many forecasters predicted in 2011. A clear sign that inflation has started declining could open the way for the Bank of England to signal a renewed expansion of its £275bn quantitative easing programme next month, as it publishes its quarterly forecasts. The Office for National Statistics, which published the inflation figures on Tuesday, said that retail price inflation, which also includes mortgage costs, also fell sharply, from 5.2% in November, to 4.8% last month. Falling petrol and gas prices, and price cuts in clothing stores were the main factors bearing down on inflation, according to the ONS, while the only upward pressure came from higher charges for phone calls, both on mobiles and landlines.