Inflation has tumbled to its lowest level in nearly three years in a boost for the Prime Minister and mortgage holders hoping for cuts to interest rates.

The consumer prices index dropped sharply in April from 3.2pc to 2.3pc following a steep decline in typical energy bills last month, according to the Office for National Statistics.

The drop takes the pace of price growth to its lowest level since July 2021 but was slightly higher than analyst forecasts of a fall to 2.1pc.

The decline in the pace of price rises will boost hopes for a summer cut to interest rates, which would provide relief to mortgage holders grappling with the highest borrowing costs in 16 years.

It is also a boost for Rishi Sunak, who has said he only wants to call a general election when people “feel that things are improving”.

Derivatives trades on money markets had indicated the Bank of England would reduce borrowing costs twice by the end of the year from 5.25pc to 4.75pc.

Traders had priced in a first cut by August and more than a 50pc chance of a first cut in June.

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