Inflation fell less than expected in Britain last month, official figures show, as Andrew Bailey indicated the Bank of England will begin cutting interest rates this summer.

The consumer prices index dropped to a two and a half-year low of 3.2pc in March, according to the Office for National Statistics, which was down from 3.4pc the previous month but higher than economists’ forecasts of 3.1pc.

Services inflation, which is closely watched by policymakers at the Bank of England, fell from 6.1pc to 6pc in March, which was higher than analysts predictions of 5.8pc.

It still leaves inflation lower in the UK than in the US, where prices rose at an annual pace of 3.5pc in March, up from 3.2pc the prior month and higher than economists had forecast.