MercoPress. South Atlantic News Agency

For third consecutive month UK inflation stands below the 2% target rate

The largest contribution in March came from the fall in petrol prices

The UK inflation rate as measured by the Consumer Prices Index (CPI) fell to 1.6% in March from 1.7% in February, according to the Office for National Statistics (ONS). It is the third consecutive month inflation has been below the Bank of England's 2% target rate, and the lowest rate since October 2009.

 The largest contribution to the fall in the rate came from petrol prices and the rate of Retail Prices Index (RPI) also fell to 2.5% from 2.7%.

Petrol prices were unchanged between February and March compared with a rise of 2.2p a litre a year earlier. A smaller rise in the prices of clothing and footwear, compared with last year, also contributed to the drop in the inflation rate.

It is the sixth consecutive month that the rate of inflation has fallen, marking the longest consecutive fall since modern records began. The drop in the rate of inflation means that the gap between average wage growth and the rise in prices has continued to narrow.

Average total earnings, including bonuses, rose 1.4% in the three months to January compared with a year earlier, according to ONS figures released last month. Excluding bonuses, wages grew by 1.3%.

The ONS will release its latest figures for average total earnings in the three months to February on Wednesday.

Capital Economics economist Samuel Tombs said: “March's UK inflation figures suggest that the six-year squeeze on real earnings is finally over.”

David Kern, chief economist at the British Chambers of Commerce (BCC) said the fall in the inflation rate was “good news” for businesses. “It contributes to an environment of stability and reduces the case for short-term interest rate rises,” he said.