The lion's share of the downward pressure came from motor fuel prices, ONS senior statistician James Tucker said.
Meanwhile, the general index for the month of December 2017 stood at 130.3, which is 7.1 percent higher as compared to the level in the month of December 2016.
"Headline inflation was unchanged with petrol prices rising by less than this time previous year".
Inflation is now the enemy of stock investors.
With inflation remaining at 3% last month it increases the likelihood of a rate hike in May.
Sterling rose 0.3% against the dollar to 1.38 United States dollars following the news. It was up 1.8 percent from a year earlier, higher than the 1.7 percent estimate.
"The worry of the markets is not that inflation is becoming a big problem, .it is that the Fed is now forced to play catch up at the same time they are shrinking their balance sheet", said Peter Boockvar, chief investment officer at Bleakley Advisory Group.
Markets would greet an increase in consumer inflation that is in line with expectations with "relief", Jones says. We have been waiting a number of years for this to happen.
India Inc lauded the continuing high single-digit recovery in industry as well as the slight fall in inflation.
Sterling jumped to as high as $1.3924 after the data, up from $1.3886 beforehand.
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"But financial markets should not assume that any hike is a done deal".
To investors, inflation is probably the most important data.
In short, the report should not be taken too seriously. "The BoE's forecasts are based on a smooth Brexit transition, and you would be forgiven for thinking that things might be bumpier, for a while at least".
The inflation for housing increased to 8.33%, while that for miscellaneous items was flat at 3.78% in January 2018. Over the last 12 months, "headline" inflation rose 2.1%. Banks benefit from higher interest rates.
Following in the footsteps of the United States Federal Reserve and the Bank of Canada, the Bank of England now looks set to join the "hikers". These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.
Nonetheless, signs of a pick-up in wages suggested that price growth might be slower to fall than the BoE hoped.
While he admitted the rising cost of oil seems to counter that prediction, the rise in prices at the pump has been "modest" compared with those seen a year earlier.
"The inflation is a major concern because the wage growth isn't there".
"This is a disaster for households, many of which are about to be clobbered with inflation-busting increases for bills such as council tax". Retail inflation directly impacts the consumer therefore a rise in inflation can become a bitter experience for the people.
The central bank's statement was less hawkish than many expected, and prompted some economists to change their predictions of a rate increase in the next few months.