Inflation fell sharply in January, supporting Bank of England forecasts for a hefty decline in 2012, after a rise in sales tax a year earlier dropped out of the data, official figures showed on Tuesday.

The Office for National Statistics said that consumer price inflation fell to 3.6 percent in January from 4.2 percent in December, extending the marked drop in inflation from September's three-year peak of 5.2 percent.

The figures will come as a relief to the BoE as it prepares to publish an update to its quarterly economic forecasts on Wednesday, though it will not prevent Governor Mervyn King from having to write a public letter explaining why inflation has remained well above target for the past two years.

Economists reckon the BoE will continue to predict in Wednesday's forecasts that CPI will fall below its 2 percent target by the end of 2012, and will remain below target in two years' time, as weak growth and an end to energy price rises bear down on prices.

January's inflation reading - the lowest since November 2010 - is in line with BoE forecasts for inflation to average just over 3.4 percent in the first three months of 2012.

The broader retail price index measure of inflation, which is often used in wage negotiations, fell to 3.9 percent from 4.8 percent, its lowest since February 2010.

King is likely to focus on the weak economy and the fading of one-off upward pressures on inflation when he publishes the quarterly letter to finance minister George Osborne later on Tuesday explaining why CPI is above target.

Despite the high inflation, the BoE's Monetary Policy Committee last week pressed ahead with another 50 billion pounds of quantitative easing gilt purchases, to be spread over the next three months, in order to boost faltering growth.

However, if the sharp fall in inflation does not continue, this may be the last bout of QE. Some MPC members expressed concerns last year about whether inflation would fall as fast as forecast once the effect of one-off factors at the start of 2012 had faded.

The ONS said January's fall in CPI was mostly due to January 2011's increase in the standard rate of value-added tax to 20 percent from 17.5 percent now being fully included in annual comparisons. Other things being equal, this reduced the rate of inflation by 0.76 percentage points, an ONS statistician said.

A stabilisation in petrol prices also pushed down the rate of inflation in the transport sector to its lowest since October 2009, but there remained upward pressure from financial services, clothing and footwear and air travel.

These trends look likely to persist in 2012. Major utility companies have announced cuts of about 5 percent to their gas and electricity prices, which will take effect over the next three months.

Moreover, producer output price inflation fell to its lowest annual rate since November 2010 in January, and several business surveys also pointed to fading cost pressures.