In January CPI stood at 4%, with the Office of National Statistics (ONS) saying this slowdown was being driven by more modest rises in food prices.

This is the lowest inflation figure for two-and-a-half years, with CPI at 3.1% in September 2021. It is considerably below its recent peak of 11.1%, recorded in October 2022. However CPI remains stubbornly above the government target of 2%, meaning that the Bank of England is likely to keep the base rate on hold at 5.25% when it meets tomorrow.

However, many across the mortgage industry agree signs that inflation is coming under control signal better news ahead for homeowners, but they cautioned against expecting any immediate drop in the interest rates.

L&C Mortgages associate director David Hollingworth says: “The expected fall in the rate of inflation should mean that mortgage borrowers can rest easy and today’s news shouldn’t result in any big market swings.

“Fixed rates have been nudging back up in the last month after rates dropped sharply in the early part of the year. The Bank of England has been holding firm to its promise to only cut rates once it has inflation under control. Today’s figures aren’t likely to shift that position and base rate will be odds on to hold tomorrow.”

However he says that fixed rates remain “substantially lower” than those available last summer and signs that inflation is coming under control should ensure this remains the case.

“The expectation remains that the Bank will cut interest rates later this year, the recent fluctuation in mortgage rates underlines that the path is far from certain.”

Andrew Montlake, from Coreco brokers told the BBC that mortgage pricing for lenders should start to look more favourable, so they could start to bring down the interest rate on new fixed deals.

Montlake says he would like to see “positive and decisive rhetoric” from the BoE around future base rate cuts when it announced its decision tomorrow.

Interactive Investor senior personal finance analyst Myron Jobson says: “The latest fall in inflation, along with recent GDP data which shows that the UK has taken its first steps out of the shallow recession it fell into in the second half of last year, could have Bank of England officials debating over how soon is too soon when it comes to cutting interest rates.

“High interest rates have made it more expensive for people to buy a house and expand a business, which can weigh on an economy over time. Bank of England policymakers have a delicate balancing act to strike of bringing inflation under control without crushing economic growth and curtailing widespread job losses and a deep recession.”

AJ Bell head of financial analysis Danni Hewson says today’s CPI data raises the possibility of a number cuts to interest rates later in the year, particularly with the fall in the energy price cap likely to further dent inflation figures next month.

“A much more manageable 3.4%, cooler than had been expected, has already impacted market expectations of how many rate cuts the Bank of England might be able to push through by the end of the year. Money markets are once again pricing in four or even the off chance of five cuts by the end of the year, where yesterday just three seemed possible.

“Today’s figures are unlikely to provide much more than a talking point for MPC members at their meeting tomorrow. The anticipated impact of a falling energy price cap will have already stoked expectation that the Bank’s 2% target is within reaching distance. Until that point a twist of the hand isn’t expected.”