Inflation steady despite fuel costs

The surprise boost to the Bank of England's fight to keep a lid on inflation came after the benchmark Consumer Prices Index (CPI) was unchanged at 2.1% last month.

This came despite oil prices soaring close to 100 dollars a barrel - which put 3.5p on the average cost of a litre of petrol, according to the Office for National Statistics (ONS).

Economists had been expecting a slight increase in CPI to 2.2%. While the measure is still above the Bank's 2% target, it could give policymakers more leeway to cut rates further to spur on a slowing economy next year after it lowered borrowing costs by a quarter-point to 5.5% earlier this month.

Food was also expected to have driven inflation higher after a near 4% surge in the price of bread, pastries and cake products pushed the annual rate of food inflation to a 14-year high last month.

But falling vegetable prices - compared with rising costs last year - offset increases in the price of items such as bread, milk and cheese last month, the ONS said.

Gas and electricity bills were also little changed this year in contrast with rising costs a year ago before energy firms moved to lower tariffs, which helped keep a lid on prices, along with bigger price cuts than a year ago on European airfares.

Meanwhile, there were further hints of tougher times on the high street, with shops cutting prices for items such as digital cameras and laptops in a bid to tempt in hard-pressed shoppers.

Photographic equipment prices were 6% lower in November than the previous month, the ONS said.

Headline Retail Prices Index inflation - seen as more representative as it includes mortgage payments - edged up by 0.1% to 4.3% this month.