Despite this drop, it was less than the anticipated 2.1%, tempering hopes for an early interest rate cut by the Bank of England.

Analysts had forecast a decline closer to the BoE’s 2% target, but the smaller-than-expected decrease has led markets to adjust their expectations, now predicting a rate cut in August rather than next month.

Peter Arnold, EY UK chief economist, said: “About half of the decline came from the energy category, with the Ofgem price cap having been cut by nearly 12%. Other downward pressures came from the food and core categories. But the fall in core inflation was disappointingly small.

“Indeed, the month-on-month change in services prices was slightly smaller than last year’s substantial increase, when high inflation the previous year had driven very large once-a-year price rises for many index-linked contracts and regulated prices.

“As expected, some categories, such as telecoms, had much smaller increases this April. But others, such as water bills, rose significantly again.”

He added: “The stickiness of services inflation presents a challenging complication for the Bank of England. The outturn for services inflation was 0.4ppts higher than the Bank of England forecast in May’s Monetary Policy Report.

“Given the importance attached to this series as a measure of inflation persistence, the scale of the overshoot will likely make it much harder for the monetary policy committee to cut in June. Furthermore, the fact that some of the overshoot reflected higher increases for goods and services where prices change once-a-year means that higher inflation is now likely baked into these categories for another year.

“Still, recent movements in wholesale gas futures prices mean Ofgem’s energy price cap is on track to fall by another 6-7% in July. And strong base effects in the food and core categories will continue to emerge. Therefore, inflation should still drop back to the Bank of England’s 2% target over the coming months.”

Kevin Brown

Kevin Brown, savings specialist at Scottish Friendly, commented: “Inflation is continuing to prove its stickiness. Even a stark drop in energy prices has not been able to bring it down enough to hit the monetary policy committee’s 2% target.

“While the inflation genie may be heading back into the bottle it remains to be seen if we can get the lid firmly back on and keep it there. That is more likely to make the MPC cagey to trim the base rate following its much-anticipated June meeting.

“Borrowers will be watching with bated breath and will be hoping they will start to loosen the fiscal straitjacket and ease the pressure on mortgage holders later this summer.”

Mr Brown added: “It’s clear though that any loosening will be done gradually to ensure inflation does not escape and run riot again.

“For cash savers, rates remain above inflation but over the medium to longer-term the best place for savers for long-term growth potential is still likely to be through investing in stocks and shares as the base rate eventually starts to tick down.

“A more realistic inflation target may be needed in future. Moving the target toward 2.5%, or even as much as 3%, would create a much more achievable and sustainable long-term target and give the bank greater flexibility in how they respond to future economic challenges, which will ultimately benefit consumers.”