Hopes that the Bank of England could cut interest rates early next year after all revived yesterday with news that inflation eased back for a second month in November to 2.1 per cent, only just ahead of the Bank's two per cent target.
This was overwhelmingly due to a dip in prices of all oil products, with petrol down by 3.6p a litre, while it rose by 1.1p in November last year.
At Birmingham Chamber of Commerce and Industry, James Cooper, policy adviser commented: "The figures reinforce our case to the Bank of England to cut interest rates early in the New Year.
"While the Bank's interestsetting committee does need to continue to be wary of the effect of energy costs on the economy, evidence suggests that falling petrol prices have been the significant factor pulling inflation down. As such, the risk of growth triggering inflation has reduced.
"Inflation seems to be retreating back towards the Government's two per cent target. Considering the manufacturing sector is technically in recession, the time is right for a quarter per cent cut in interest rates to boost this sector of the economy."
Chancellor Gordon Brown's chosen measure of inflation, the Consumer Prices index stood still between October and November.
But because a 0.18 per cent increase in November last year fell out of the 12-month reckoning, year-on-year inflation dipped to 2.1 per cent from 2.3 per cent in October and a recent high of 2.5 per cent in September.
The long-running Retail Prices Index, used as a starting point in many pay negotiations and as the basis for most pensions and state benefits, edged up by 0.16 per cent last month, pushing its annual increase to 2.4 per cent - its lowest level since October, 2002 - from 2.5 per cent in October and 2.9 per cent in July.
National Statistics said the difference between the two indices arose largely because air fares - which fell more sharply than last November - count for less in the RPI than in the CPI. Also furniture prices, which rose by more than they did last year, loom larger in the RPI.
The Bank's old benchmark, the RPI not counting mortgage interest, rose by 0.11 per cent last month, while its annual increase came back to 2.3 per cent from 2.4 per cent in October and 2.5 per cent in September.