Although inflation has slowed to 10.5%, the cost of living crisis is not over.

Inflation fell to 10.5%, but is still close to its 40-year peak as UK households are being squeezed by the government. cost of living crisis.

According to the Office for National Statistics, inflation, which measures how fast prices rise, declined to 10.5% in December from 10.7% in November.

However, inflation remains at an all-time high of 40% as Brits feel the squeeze.

This was due to the fall in fuel prices and clothing and footwear prices. However, rising prices in restaurants and hotels offset this.

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Grant Fitzner, chief economist at the ONS, said: “Inflation eased slightly in December, although still at a very high level, with overall prices rising strongly during the last year as a whole.

“Prices at the pump fell notably in December, with the cost of clothing also dropping back slightly.

“However, this was offset by increases for coach and air fares as well as overnight hotel accommodation.

“Food costs continue to spike, with prices also rising in shops, cafes and restaurants.”

As the inflation rate continues to decline slowly, this is bad news for borrowers. Bank of England It will likely continue to increase interest rates to keep inflation at 2%.

Chancellor Jeremy Hunt said: “High inflation is a nightmare for family budgets, destroys business investment and leads to strike action, so however tough, we need to stick to our plan to bring it down.

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“While any fall in inflation is welcome, we have a plan to go further and halve inflation this year, reduce debt and grow the economy – but it is vital that we take the difficult decisions needed and see the plan through.

“To help families in the meantime, we are providing an average of £3,500 of support for every household over this year and next.”

This number is lower than the 41-year high of 11.1% in October. It could indicate that today’s figures are the latest sign that inflation has reached its worst.

Watch: How does inflation impact interest rates?