Inflation retreats further, remains above 10 per cent

“This was driven by the price of air and coach travel dropping back after last month’s steep rise. Petrol prices continue to fall and there was a dip in restaurant, cafe and takeaway prices,” he added.

However prices remain high and rising in alcohol, tobacco and household services like energy.

Chancellor Jeremy Hunt welcomed the reduction but cautioned that “the fight is far from over”.

He added in a statement: “High inflation strangles growth and causes pain for families and businesses – that’s why we must stick to the plan (to) halve inflation this year, reduce debt and grow the economy.”

The data comes after figures last week showed Britain narrowly avoided recession in 2022.

Global inflation soared last year, with the rate of UK price increases peaking above 11 per cent in October, as the invasion of Ukraine by Russia fuelled energy and food prices.

That has triggered a cost-of-living crisis, with Britain facing its biggest strikes by workers in more than a decade as high inflation erodes the value of wages.

Nicholas Hyett, investment analyst at Wealth Club, said the CPI numbers do little to ‘calm confusion in the financial aviary’.  

“Is inflation still problematically high or is it now coming under control? You could argue for either, or even both, a sign of the confused picture for inflation at present. It won’t make life easier for the policymakers, and raises questions around the future course of interest rates in particular,” he said.  

“When it comes to interest rates, the financial world divides into the hawks and the doves – those who think rates will rise and those who think rates will fall. Sentiment has swung wildly between the two over the last six months, and since inflation is the key factor determining interest rate movements these numbers will have been closely watched by both sides. Unfortunately, there’s little in here to calm confusion in the financial aviary.”