Inflation atlowest levelfor 26months

INFLATION FELL to its lowest level in more than two years last month, official figures showed yesterday.

The Consumer Price Index ( CPI) rate of inflation fell to 3% in April, compared with 3.5% in March, its lowest level since February 2010, the Office for National Statistics (ONS) said.

In further evidence the weak economic climate is forcing retailers to cut prices to draw in customers, clothing and footwear prices rose by just 0.2% in the period compared with 1.4% last year.

And softer excise duty rises on alcohol and tobacco, as well as lower air fares due to the timing of Easter, also helped keep a lid on the rising cost of living.

Bank of England Governor Sir Mervyn King narrowly avoided sending his 10th “Dear Chancellor” letter to explain why inflation is higher than the Government’s 2% target, as at 3% it is now within one percentage point of that goal.

Inflation has fallen from 5.6% last September due to the waning impact of thevat hike at the start of 2011, falling energy, food and commodity prices and a number of bill cuts from utility providers.

However, it has not dropped as quickly as the Bank of England expected after fears over increasing tensions between the west and Iran pushed oil prices higher in March.

The sharp decrease in inflation in April is likely to bolster the case for the bank to pump more emergency cash into the economy through its quantitative easing programme.

The economy entered a technical recession in the first quarter of the year as gross domestic product declined 0.2%, following a 0.3% drop in the final quarter of 2011.