UK inflation fell to 3.4% in May from 3.7% in April, according to the Office of National Statistics.

The fall is bigger than the 3.5% that many analysts predicted but means that inflation is still well above the Bank of England's target of 2%.

The Office of National Statistics said the drop was helped by lower food prices, as well as slower rises in the price of petrol, alcohol and tobacco.

"Given the continued weakness of the economy, and the tough deficit-reduction measures expected in next week's Budget, it is important for the MPC to maintain low interest rates for a prolonged period. Any premature rise in interest rates would heighten the risk of triggering a new downturn," said David Kern, chief economist at the British Chambers of Commerce.