Inflation plunged to its lowest level in more than four years in March, dropping to 1.6%, according to the Office of National Statistics.
It means it is at the lowest rate since October 2009, and is down from 1.7% in February, providing good news for many families who have struggled throughout the recession.
Lower food, fuel, furniture and clothing costs have driven down the Consumer Price Index while wages grew by 1.8%.
This ends a six year period where pay was behind the rate of inflation, while possible wage increases of 2% could occur in April.
“These latest inflation numbers are welcome news for families,” said Chancellor George Osborne.
“Lower inflation and rising job numbers show our long-term plan is working, and bringing greater economic security.”
Food and petrol driving down inflation
Food and non-alcoholic drink inflation hit a four-year low of 1.7% in March while fuel prices put a great deal of downward pressure on inflation.
While petrol was unchanged between February and March, it compared with a rise of 2.2p a litre for the same period in 2013.
Meanwhile diesel prices dropped by 0.4p compared with a 1.9p rise in 2013, highlighting the pressures placed by the fuel market on inflation.
Samuel Tombs, UK economist at Capital Economics, suggested that inflation could continue to fall in 2014 and that it could mean that interest rates do not rise for a considerable time yet.
“March’s UK inflation figures suggest that the six-year squeeze on real earnings is finally over,” he said.
“We continue to think that a combination of stable commodity prices, falling import prices and recovering productivity will push CPI inflation as low as one per cent before the year is out.”