This month's inflation rate is also normally used to set April's increase in benefits including jobseeker's allowance, maternity allowance, housing benefit and universal credit.

Inflation in the U.K. has fallen to its lowest level in more than three years, a drop that has cemented market expectations that the Bank of England will lower interest rates at its next policy meetin

LONDON (Reuters) -British inflation fell by more than expected last month, including key measures watched by the Bank of England, according to data on Wednesday that bolstered bets on an interest rate cut next month.

It means the annual rate prices are rising at is now below the Bank of England's 2% target, paving the way for further interest rate cuts. Lower airfares and petrol prices were the main drivers behind the surprise slowdown,