The fall in inflation was largely due to food prices slowing, according to the Office for National Statistics (ONS).

Although inflation has fallen, prices are still rising compared with last year – just at a slower rate.

It brings inflation further towards the UK’s two per cent target, and away from the 40-year peak seen in 2022.

Chancellor of the Exchequer, Jeremy Hunt said: “The plan is working: inflation is falling faster than expected, down from over 11 per cent to 3.2 per cent, the lowest level in nearly two and a half years, helping people’s money go further.

“This welcome news comes on top of our cuts to national insurance, which save the average worker £900 a year, so people should start to feel the difference as well as see it in their pay cheques.”

What does inflation rate mean for my mortgage?

The declining inflation is a “win” for first-time buyers and homeowners who will remortgage this year, Jonathan Bone, mortgage lead to Better.co.uk said.

He explained: “The Bank of England may now consider reducing the base rate sooner rather than later, which could give mortgage lenders an incentive to offer more enticing deals.

“Those looking to climb the property ladder may be hesitant to take the next step, hoping interest rates may fall, but there’s never a perfect moment to buy a home. Don’t let the pursuit of potential savings mean you miss out on your dream home – mortgage offers typically last between three to six months, giving you the flexibility to switch to a better rate if interest rates are cut later this year.

“For those needing to remortgage this year, you can speak to a mortgage broker up to six months before the end of your current deal to understand how much extra you need to budget per month on your mortgage repayments.”