UK inflation fell to 3% in February from the previous month's 3.5%, according to figures released by the Office for National Statistics.

The drop in the Consumer Prices Index (CPI) - the measure of the average price of consumer goods and services purchased by households - was sharper than economists had predicted.

The Retail Price Index - which includes mortgage interest payments - remained unchanged in February at 3.7%.

The figures raise hopes that inflation has peaked and will drop back below the Bank of England's 2% target by the end of the year.

"Although CPI inflation is at 3%, the fall in February was bigger than expected, and the underlying trend is likely to be downwards over the next few months," said David Kern, chief economist at the British Chambers of Commerce.

"These figures, coupled with low private sector wage increases, should enable the MPC to maintain an expansionary policy approach without worrying that inflation will accelerate in the near future."