UK inflation falls to 1.7pc in February

The ONS said the main upward pressure on inflation came from furniture and household equipment, which analysts said highlighted the strength of the UK housing market.

"A sizeable upward shift in year-on-year terms in furniture and household equipment ... can be laid at the door of the 'booming' housing market. This is not per se, something for the [Bank of England] to react to, however it should heighten their sensitivity to housing market trends," said Marc Ostwald, a strategist at Monument Securities.

The pound rose on Tuesday morning following the data.

"Prior to the release, there were growing concerns that the heavy discounting by UK retailers last month would see the data print weaker than 1.7pc," said Alex Edwards, head of the corporate desk at UKForex. "Although it’s the lowest reading in four years we’ve seen what might be described as a mild ‘relief’ bounce in [the pound versus the dollar] and it has pushed back above $1.65."

The retail prices index (RPI) measure of inflation, which is no longer classed as an official statistic by the ONS but is still used to calculate many benefits and pay deals, eased to 2.7pc in February, from 2.8pc in January, while annual core inflation, which excludes energy and food, rose to 1.7pc in February, from 1.6pc in January.

A stronger pound has also helped to keep input prices for manufacturers down. ONS on Tuesday showed factory gate prices rose by 0.5pc in annual terms in February – less than forecast and the smallest rise since October 2009.

A Treasury spokesman said: “Inflation has fallen to its lowest level in over four years helping households across the country."

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