The Consumer Prices Index (CPI) rate of inflation has fallen below three per cent for the first time in more than two years, latest figures have revealed.

The CPI – the government’s preferred measure of inflation – fell from 3 per cent to 2.8 per cent in May, the lowest level since November 2009.

The Office for National Statistics (ONS) said that the largest downward pressure on the CPI came from fuel, food and non-alcoholic drink prices.

It added that the biggest upward influence on the CPI between April and May was from air and sea transport – where the timing of Easter had a significant impact compared to last year.

The Retail Prices Index – which includes housing costs and is often use to benchmark pay rises – also fell significantly last month, from 3.5 per cent to 3.1 per cent, the lowest rate since December 2009.

The ONS announced this week that is was considering changes to the way inflation is measured.

It has proposed a new version of the Consumer Prices Index – labelled CPIH – which would take into account of a range of costs associated with being an owner-occupier of house. The formula for calculating RPI could also be amended to bring it into line with the method used for calculating CPI.

The reforms are likely to result in lower inflation rate figures and could have could have implications for pension funds and pay deals.

Meanwhile, the leader of the country’s largest public-sector union is expected to warn of strike action over stagnant pay in the public sector.

Dave Prentis will tell Unison’s annual conference in Bournemouth today that the trade union will “smash the pay freeze” and is prepared to ballot for industrial action.

In the 2010 Budget the government announced a two-year pay freeze for the public sector, although people earning £21,000 were entitled to an increase of £250 per year.

In the 2011 Autumn Statement pay was then set at an average of 1 per cent for the two years that follow the current freeze.

Pay increases in the private sector currently average 3 per cent, according to the most recent figures from Income Data Services.