CPI inflation falls to 2.9% in March

Consumer Prices Index (CPI) annual inflation - the Government's target measure - fell to 2.9 per cent in March, down from 3.2 per cent in February.

For the first time since March 1960, annual inflation measured by the Retail Prices Index (RPI) - which includes housing costs such as mortgage interest payments and council tax - fell below zero. It fell to -0.4 per cent in March from 0.0 per cent in February.

The largest downward effect on the CPI came from housing and household services. This was mainly due to a fall in gas bills while they were unchanged a year ago. There was also a downward effect from heating oil which fell this year compared with a rise last year.

Food and non-alcoholic beverages contributed to the downward move with the largest effect coming from vegetables where prices fell by more than a year ago across a range of products. Fruit also fell by more than a year ago while bread and cereals fell this year compared with a rise last year.

Transport costs also pushed the figure down. This was mainly because of lower air fares on European routes. There was also an effect from fuel which is rising less this year than it was at the same time last year.

The average price of petrol rose by 0.9p per litre between February and March to 90.4p but this compares with a rise of 2.3p per litre last year. Diesel fell by 0.5p per litre this year compared with a rise of 3.8p per litre last year. A partial offset to this was a rise in the price of second-hand cars this year compared with a fall last year.

Prices rose within the recreation and culture category with the main pressure coming from games, toys, hobbies particularly computer games. Personal computer prices were little changed this year but this compared to a fall a year ago.

Prices for clothing and footwear rose by more than a year ago and this was particularly across a range of women's outerwear.

RPIX inflation - the all-items RPI excluding mortgage interest payments - was 2.2 per cent in March, down from 2.5 per cent in February - the lowest since March 2006.