What the fall in the rate of inflation could mean to YOU

Drop is driven by reductions in cost of bread, cereal and petrol

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UK inflation has fallen to its lowest since March last year due to a drop in petrol, food and airfare prices.

It could mean good news for consumers and people paying interest on various types of debt.

The drop has raised the likelihood that the Bank of England will cut interest rates next month, with economists predicting that inflation is on track to drop to target levels by April.

The rate of Consumer Prices Index (CPI) inflation decreased to 3% in January from 3.4% in December, the Office for National Statistics (ONS) said.

The reading was in line with analyst predictions and puts inflation back on a downward trajectory after an increase in the previous month.

The inflation slowdown will provide some relief for the Chancellor Rachel Reeves, amid efforts by the Bank of England to bring inflation back to the target level of 2%.

Economists said on Wednesday that the latest reading has lifted hopes that central bankers will cut interest rates next month from their current rate of 3.75%, with expectations that a further cut could take place later this year.