Experts believe these figures places further pressure on the possibility of a rate cut at the January Bank of England’s Monetary Policy Committee (MPC) meeting later this month.

According to The Share Centre the drop in inflation partly reflects the fall in November GDP growth and Brexit uncertainty.

Joe Healey, investment research analyst at The Share Centre, commented: “With some MPC members outlining concerns over the recent run of weak data, today’s drop in Inflation will likely add a bit of extra fuel to the fire.

“However, despite these figures indicating a higher chance of a rate cut, it is likely the deciding factor will be the PMI release on 24 January. If no bounce is witnessed there, then the support for a rate cut will grow.

Purchasing Managers’ Indexes (PMI) are economic indicators derived from monthly surveys of private sector companies.

Healey continued: “Businesses are still clouded by uncertainty and it is safe to say, if we continue to see no signs of a bounce, the question of a rate cut will shift from ‘if’ to ‘when’.”

Olivier Konzeoue, FX sales trader at Saxo Markets, said: “More MPC members are singing the same dovish tune with Vlieghe, an influential external member, being the last to break silence and pledge to vote for a rate cut should the UK economy fail to bounce in Q1 2020.

“The MPC meeting seems more ‘live’ than ever in January with a 62% probability (from 50% yesterday) for a 25bps rate cut, putting further pressure on the ever resilient Great British pound.”

Rupert Thompson, chief investment officer at Kingswood, added: “The inflation data are at the moment of secondary importance to the growth data for the Bank of England. Nonetheless, the latest inflation numbers can only encourage the Bank to cut rates if growth fails to pick up as expected over coming months.”

Ayush Ansal, chief investment officer at Crimson Black Capital, commented: “Coming after a triple whammy of weak retail sales and slowdowns in both the manufacturing and service sectors, this surprise fall in inflation will arguably put the doves in the driving seat at the Bank of England.

“When the Bank’s Monetary Policy Committee meets later this month, the possibility of an interest rate cut will now be firmly on the table. With the UK economy stuttering, the Bank may conclude that it’s better to get ahead of the curve on rates rather than risk playing catch up.”