Annual Consumer Prices Index (CPI) inflation dropped to 3 per cent in January from 3.1 per cent in December, according to the Office for National Statistics (ONS).

Retail Price Index (RPI) inflation slowed to 0.1 per cent in January, down from 0.9 per cent in December, marking the lowest RPI annual inflation rate since March 1960.

The RPI was largely impacted by the drop in housing costs, particularly falling mortgage interest payments.

The ONS reported that the price reductions on many items between December and January was less than in the previous year because of widespread discounting before Christmas, resulting in “an upward effect on the CPI”.