A drop in the price of petrol and diesel helped to push UK inflation down in February to 1.7 per cent, below the Bank of England’s target rate of two per cent.

The Consumer Price Index (CPI), which measures a range of commonly bought goods, showed average petrol and diesel prices down 0.8p a litre. This time last year prices had jumped 4p.

It was the second consecutive month government data revealed inflation below the Bank of England target, although in recent years inflation has more often been above the target than below.

During the same time frame public sector salaries went up 0.9 per cent while private sector pay was up 1.7 per cent.

Labour said the public sector pay lag was more evidence of a “squeeze” on households.

"The squeeze continues as prices are still rising faster than wages. Working people facing this cost-of-living crisis are on average £1,600 a year worse off since David Cameron came to office," said shadow Treasury minister Catherine McKinnell.

But in a tweet, David Cameron said the figures were further evidence of a recovery. "Our long term economic plan is helping provide stability and security for hard-working people," he said.