However, consumer price index advanced 0.8 percent on a month-on-month basis, its statistics department data showed.
Lower petrol prices and cheaper hotel rooms - compared to a period previous year when price readings were taken on Valentine's Day - were among the reasons for the decline, which was slightly bigger than expected. Those forecasts now appear to be materialising, with inflation dropping 0.3 percentage points in the month, a significant fall.
Prices grew by 2.7 per cent in February - that's down from 3 per cent in January and 3.1 per cent in November when inflation reached its highest level since March 2012.
Khalaf said that while falling inflation should go some way to alleviating the consumer squeeze, annual price rises are still high for essential items like electricity, food and transport.
Last year's figure was boosted by a shortage of salad and vegetables, when crops in southern Mediterranean countries were hit by bad weather.
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The ONS said that a small fall in petrol prices alongside food prices rising more slowly than past year helped pull down inflation, as numerous early 2017 price increases due to the previous depreciation of the pound have started to work through the system.
The main upward pressure on the cost of living came from clothing and footwear prices, which rose by 1.7 per cent on the month - compared to 1.2 per cent in 2017 - as women's shoes became more expensive.
Incomes data do lag prices, but if the trends continue (inflation easing and wages increasing) then it is likely that many millions of people will see their real incomes start rising again by the end of the year.
"Whilst we are moving back towards a position where there will be growth in real wages, that is wages adjusted for inflation, any substantial growth in real living standards is still some way off". This perception will be key to expectations for the next Bank of England interest rate rise and the performance of Pound Sterling in the short term.
Which is much better news than we have had recently, particularly after the inflation spike which followed the Brexit referendum and the fall in the value of the pound.
Jacob Deppe, the head of trading at online trading platform Infinox, added: "While the Monetary Policy Committee (MPC) meets on Thursday it seems highly unlikely that it will agree to hike rates just yet".