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Inflation in Britain eased during January, official figures have revealed, going some way to justifying recent interest rate rises.

Consumer price index (CPI) inflation fell to 2.7 per cent in the first month of 2007, down from the 11-year-high of three per cent in December last year.

If inflation had exceeded three per cent, as some analysts had predicted, then Bank of England governor Mervyn King would have been required to write a letter to Gordon Brown explaining why the Bank was failing to reign in inflation.

But correspondence to the chancellor has been avoided following interest rate rises in the latter half of 2006 and January's shock increase of a quarter of a per cent to 5.25 per cent.

The Office for National Statistics (ONS) revealed that the largest downward effect on inflation came from falling transport costs, with fuel prices falling compared to last year's increase.

Rising tobacco and alcohol prices pushed inflation back up meanwhile.

In the accompanying retail price index (RPI), which includes mortgage interest payments, inflation fell to 4.2 per cent in January, down from December's 4.4 per cent.

Howard Archer, chief UK and European economist at Global Insight, admitted that today's inflation figures will come as a "major relief" to the Bank.

"Nevertheless, significant medium-term inflation risks remain, as there is still a possibility that wage settlements will move markedly higher in the 2007 pay rounds," he said.

"Consequently, we still think interest rates will reach 5.5 per cent, but this should prove to be the peak."