Inflation is on the way down although the sharp drop this morning may have quite a bit to do with the fact that last January's hike in VAT is now out of the system.
The consumer price index(CPI) fell to 3.6 per cent from last month's 4.2 per cent according to figures out this morning from the Office of National Statistics.
RPI annual inflation which includes Mortgage interest payments was 3.9 per cent in January, down from 4.8 per cent in December.
According to the ONS, The largest downward pressures to this change came from fuels & lubricants, products bought in restaurants & cafes, tobacco, vehicle maintenance & repair, the purchase of new vehicles and alcoholic beverages.
Annual inflation has now fallen by 1.2 percentage points since November 2011; the only time there has been a larger fall over a period of two consecutive months was between October and December 2008.
The rate still remains well above the Bank of England's rate of 2 per cent but yesterday's forecast from the CBI suggested that the rate will be a lot nearer to the target by the end of the year