The cost of running a car fell in December, according to figures from the Office for National Statistics. Its Consumer Price Index (CPI) showed a

drop in the price of petrol and oil of 6.2 per cent, while the cost of buying of motor vehicles fell by 2.5 per cent. Maintenance of motor vehicles also showed a fall in costs – down 2.1 per cent on the previous month.

The cost of vehicle tax and insurance were one of the few areas to show a rise, with a 0.9 per cent increase.

Meanwhile, annual inflation fell to 3.1 per cent in December, down from 4.1 per cent in November.

According to the Office for National Statistics, the reduction in the rate of VAT made the largest contribution to the one percentage point change in the CPI annual rate.

In a statement it added: "There were also effects from a fall in the prices of petrol and diesel and from greater discounting in sales than last year.

"Transport costs made anther large downward contribution. The largest effect came from the price of fuels and lubricants which fell this year but rose last year. The average price of petrol fell by 6p per litre between November and December this year, to stand at 89.2p compared with a rise of 1.7p last year.

"Diesel prices fell by 6.4p per litre this year to stand at 102.4p, compared with a rise of 3p last year."