UK inflation for February was at 3.4 per cent, down from 4 per cent, official figures show.
It is a larger fall than expected after economists forecast the Office for National Statistics (ONS) figure to stand at 3.5 per cent in February.
It is also the lowest reading since September 2021, when inflation stood at 3.1 per cent.
Announcing the new figure, the ONS said: “The largest downward contributions to the monthly change… came from food, and restaurants and cafes, while the largest upward contributions came from housing and household services, and motor fuels”.
The decline in inflation has bolstered hopes that the Bank of England will cut interest rates in the summer, boosting household incomes ahead of an election.
Chancellor Jeremy Hunt responded by saying said this number could hit the Bank of England’s 2 per cent target “within months”.
Hunt said: “The plan is working. Inflation has not just fallen decisively but is forecast to hit the 2% target within months.
“This sets the scene for better economic conditions which could allow further progress on our ambition to boost growth and make work pay by bringing down national insurance as we work towards abolishing the double tax on work — but only if we can do so without increasing borrowing or cutting funding for public services.”
Also responding to the new inflation figure in Wednesday morning, shadow chancellor Rachel Reeves said: “After fourteen years of chaos and uncertainty under the Conservatives working people are worse off. Prices are still high, the tax burden is the highest it has been in seventy years and mortgage payments are going up.
“Now Rishi Sunak is putting forward a reckless £46 billion unfunded tax plan to abolish national insurance that would risk crashing the economy and re-running the disastrous Liz Truss experiment.
“Britain cannot afford another five years of this failed Conservative government.
“It’s time for change and it’s time for Rishi Sunak to set the date for the election”.
James Smith, research director at the Resolution Foundation, said: “The fastest fall in inflation for almost half a century will be welcome news for households – with food inflation falling to its lowest rate in two years – and the Bank of England, as inflation looks on track to hit its 2pc target in April.
“Services inflation also continues to fall which, coupled with falling nominal wage growth, should give monetary policy makers more confidence that wage pressures on inflation are starting to ease.”
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