The Office for National Statistics (ONS) also revealed that the Consumer Prices Index including owner occupiers' housing costs (CPIH) 12-month inflation rate was 2.3% in March 2018, down from 2.5% in February 2018.
Thomas Wells, manager of the Smith & Williamson Global Inflation Linked Bond Fund, said: "UK inflation has eased from the high levels seen in the fourth quarter, and we expect headline inflation to moderate further in the second half of the year, slowly moving back towards target, although the actual glide path from here will depend on what the Bank of England does with the Bank Rate".
Consumer Price Inflation - the key measure - fell to 2.5% in March, down from 2.7% in February.
Wednesday's inflation data comes just 24 hours after the ONS revealed that wages in the United Kingdom grew by 2.8% over the most recent data period.
United Kingdom inflation has fallen more than expected to its lowest level in a year, casting doubt over whether the Bank of England will hike interest rates at all this year.
Central banks in many rich nations have been puzzled by the failure of wages to rise more quickly as unemployment falls, something they link to factors ranging from increased use of technology by firms to growth in the number of insecure jobs.
The pound tumbled after the data, sliding 0.5% to $1.4217.
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The fall in inflation means it is highly likely that wage growth in real terms has by now returned.
He said the level of debt in the economy remains high, as consumer spending was stable even when inflation was high, and this must be the outcome of more borrowing. Against the euro, the pound was trading 0.3 per cent lower at 1.15. It was the first time since January 2017 that wage growth had outstripped inflation.
However, investors were spooked by the unexpected drop in the CPI figure and what it could mean for interest rates, sending the pound down almost 0.7% against the United States dollar to 1.418 and almost 0.6% against the euro to 1.148.
However, the cost of oil and fats surged 6.7 per cent in March, past the 2.8 per cent rise a year ago, with margarine applying notable upward pressure.
United Kingdom manufacturers increased the prices they charged by 2.4% compared with 2.6% in February, slightly stronger than the consensus forecast of 2.3% but still marking the weakest rate of increase since November 2016.
The ONS also said United Kingdom house prices in February rose by 4.4% compared with 4.7% in January, the weakest increase in seven months.
The inactivity rate (the proportion of people aged from 16 to 64 years who were economically inactive) was 21.2%, lower than for a year earlier (21.6%) and the joint lowest since comparable records began in 1971.