Inflation falls back to 3%

Inflation fell back to 3% in February after a sharp spike at the beginning of the year.

The latest figures from the Office for National Statistics show the Consumer Prices Index (CPI) fell by 0.5% compared with January.

However, the Retail Prices Index (RPI) remained stable, with prices up 3.7% over the past 12 months.

Recreational and cultural goods were the main reason for the fall in CPI, with many prices unchanged after a sharp rise a year ago, while the cost of computer games and pre-school toys fell sharply.

A fall in average household gas bills, following price reductions by a number of major suppliers, was also a major contributory factor.

Clothing and footwear prices increased, as did the cost of restaurants and hotels.

Falling inflation may allow the Bank of England to keep interest rates at their current low of 0.5% for longer, bolstering the economy as it climbs out of recession.