Inflation rate nosedives

Inflation fell sharply on both the main measures as the impact of the January 2011 VAT increase to 20% was lost in the figures.

Under the Retail Prices Index, inflation fell to 3.9% in January from December’s 4.8%. It is now at its lowest rate for almost two years.

The fall in Consumer Prices Index (CPI) inflation was not as steep. CPI inflation was rising by 3.6% in January against 4.2% the previous month.