SMUG ministers told cash-starved workers and pensioners to celebrate yesterday after dodgy government stats showed the lowest rate of inflation since 2002.

Treasury Secretary Danny Alexander said the 1 per cent rise in the consumer price index (CPI) in November — down 0.2 per cent on October — was “an early Christmas present” for millions of families.

But Labour and trade unionists warned that it would have little impact on a population suffering the biggest sustained decline in living standards since the Victorian era.

Trades Union Congress general secretary Frances O’Grady called for a renewed focus on pay, warning: “Seven years of falling real wages have damaged our economy and left the recovery looking increasingly fragile and unbalanced.”

On average people face a wage freeze this year with pay awards also standing at 1 per cent, said shadow Treasury minister Cathy Jamieson.

“The squeeze on living standards since 2010 means working people are on average £1,600 a year worse off,” she added.

Bank of England governor Mark Carney suggested that CPI would fall still further on the back of plummeting oil prices.

But he warned that the dropping value of the commodity could also have a disastrous knock-on effect on eurozone countries trying to avoid deflation.

Falling prices would push up the cost of debts and risk a major EU slump.

The 1 per cent figure also masked the true costs faced by ordinary people, with inflation measured via the retail price index, including housing costs, at 2 per cent.