Unexpected drop in inflation lifts pressure off Rachel Reeves

The chancellor, Rachel Reeves, is trying to get the government on the front foot with its economic policy. Photograph: Florence Lo/Reuters

Rachel Reeves has been handed breathing space after better-than-expected inflation figures raised expectations for a Bank of England rate cut and reduced UK borrowing costs.

After a tough week for the government on the economy, official figures showed inflation unexpectedly cooled in December to 2.5%, down from 2.6% in the previous month, meaning prices rose at a slower rate.