The latest figures are the closest to the Bank of England’s (BoE) 2% inflation target but still at the higher end of forecasts.

The BoE has repeatedly said that it will not start to reduce interest rates until there are clear signs inflation is under control.

The biggest drivers behind the decrease include falling gas and electricity prices, while the largest, partially offsetting, upward contribution came from motor fuels, with prices rising this year but falling a year ago.

While the rate of inflation continues to slow, L&C Mortgages associate director David Hollingworth says it may also bring “some disappointment for those looking for signs of an imminent cut to base rate”.

Hollingworth adds: “Mortgage rates have eased back a touch in recent weeks, but today’s figures may well hold back the chance for that to become a stronger trend. A big fall in inflation was already expected and therefore already priced into fixed rates.”

UK Prime Minister Rishi Sunak says: “Wages have been rising faster than prices for almost a year now, energy bills are down hundreds of pounds now from where they were, mortgage rates are down from the peak and today’s news on inflation being back to normal is very welcome.”

Market Financial Solutions chief executive officer Paresh Raja says: “At long last, the UK’s rate of inflation has fallen to around the Bank of England’s (BoE) target of 2%, offering a significant reprieve for investors after three years of eyewatering price increases.”

“With purchasing power now returning to a more normal level, the positive house price data that we have witnessed in the last week is likely to be compounded as more investors look to re-enter what is now a recovering market.”

“However, it is important to acknowledge that while inflation is trending downwards, we are still not at a point where interest rates are going to be reduced significantly.”

Last week, the BoE’s outgoing deputy governor Ben Broadbent said that UK interest rates could be cut this summer if inflation continues to fall.

However, Raja says: “The journey to a more manageable base rate will continue for some time.”

Meanwhile, Target managing director Katie Pender says today’s inflations figure is “great news”.

Pender adds: “Could this herald a much-anticipated interest rate cut this summer, making borrowing cheaper for homebuyers?”

“However, we mustn’t forget the many homeowners who will still be tied into higher mortgage rates for some time. Affordability and supply will remain significant issues and, with a General Election imminent, whoever forms the next Government must tackle these.”