Inflation has now fallen 1.2 per cent in only two months, the only time there has been a larger fall over two consecutive months was between October and December 2008.

The 0.6 per cent fall in the consumer price indices was due to the lack of VAT rise.

For the same period last year, the rise in VAT from 17.5 per cent to 20 per cent added 0.76 per cent to the one-month change in inflation.

This matters to the current figure because the changes in annual inflation are calculated by comparing the price changes between the latest two months and the same two months a year ago.

Significant upward pressures came from financial services which rose by 0.7 per cent partly due to an increase in overdraft fees, clothing and footwear, recording media and air transport.

The largest downward pressure came from fuels and lubricants, tobacco and vehicle maintenance and repair.

Retail price indices inflation (RPI) stands at 3.9 per cent, down from 4.8 per cent in December. The largest downward pressure affecting RPI was from motoring expenditure and alcoholic drinks.

More details on the figures will be given in the Bank of England’s Inflation Report which will be released on 15 February.