UK inflation rate falls to 3.6% in January

Inflation fell sharply in January as the impact of last year's VAT rise was no longer shown in the figures.

The Consumer Prices Index (CPI) measure of inflation fell to 3.6% in January, down from 4.2% in December, according to the Office for National Statistics.

Retail Prices Index (RPI) inflation - including mortgage interest payments - fell to 3.9% from 4.8%.

VAT went up from 17.5% to 20% in January 2011, pushing up the annual inflation rates that year as a result.

The drop brings CPI inflation to a 14-month low. However, the rate remains well above the Bank of England's 2% target.

The government said it expected the inflation rate to continue to fall this year.

"Inflation fell significantly in January for the second month in a row, which is good news for family budgets. The Bank of England and other forecasters expect inflation to keep falling through this year, providing additional relief," said a statement from the UK Treasury.